11157 2014 2010010 0 ANNUAL STATEMENT Anuales/2014… · 11157 2014 2010010 0 ANNUAL STATEMENT For the Year Ended December 31, 2014 of the Condition and Affairs of the MMM Healthcare,

*11157201420100100*

ANNUAL STATEMENTFor the Year Ended December 31, 2014

of the Condition and Affairs of the

MMM Healthcare, LLC.NAIC Group Code..... 0, 0 NAIC Company Code..... 11157 Employer's ID Number..... 660588600

(Current Period) (Prior Period)Organized under the Laws of PR State of Domicile or Port of Entry PR Country of Domicile USLicensed as Business Type..... Is HMO Federally Qualified? Yes [ X ] No [ ]Incorporated/Organized..... September 25, 2000 Commenced Business..... January 1, 2001Statutory Home Office 350 CHARDON AVE. STE. 500….. SAN JUAN ..... ..... …. 918

(Street and Number) (City or Town, State, Country and Zip Code)Main Administrative Office 350 CHARDON AVE. STE. 500….. SAN JUAN ..... PR ..... …. 918 787-622-3000

(Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number)Mail Address 350 CHARDON AVE. STE. 500….. SAN JUAN ..... PR ..... …. 918

(Street and Number or P. O. Box) (City or Town, State, Country and Zip Code)Primary Location of Books and Records 350 CHARDON AVE. STE. 500….. SAN JUAN ..... PR ..... …. 918 787-622-3000

(Street and Number) (City or Town, State, Country and Zip Code) (Area Code) (Telephone Number)Internet Web Site Address WWW.MEDICAREYMUCHOMAS.COMStatutory Statement Contact SONIA I NIEVES 787-620-2399

(Name) (Area Code) (Telephone Number) (Extension)[email protected] 787-620-2399(E-Mail Address) (Fax Number)

OFFICERSName Title Name Title

1. ORLANDO GONZALEZ PRESIDENT 2. CARLOS VIVALDI CHIEF FINANCIAL OFFICER3. 4.

OTHERRICHARD SHINTO CEO CARLOS VIVALDI TREASURER / CFOMYRA PLUMEY COMPLIANCE OFFICER MANUEL SANCHEZ SIERRA COOSOLANGE DE LAHONGRAIS SECRETARY WILSON QUIROGA VICE PRESIDENTVIVIAN ARTHUR TORRES VICE PRESIDENT LUIS GARCIA PADILLA VICE PRESIDENTVILMARIE GARCIA VICE PRESIDENT JUAN ARILL VICE PRESIDENTIVELISSE FERNANDEZ VICEPRESIDENT DIEGO ROSSO CMO

DIRECTORS OR TRUSTEESRICHARD SHINTO ORLANDO GONZALEZ DOUG MALTON CARLOS VIVALDI

State of........County of.....

The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting periodstated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except asherein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statementof all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductionstherefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Proceduresmanual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices andprocedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers alsoincludes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of theenclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement.

(Signature) (Signature) (Signature)ORLANDO GONZALEZ CARLOS VIVALDI

1. (Printed Name) 2. (Printed Name) 3. (Printed Name)PRESIDENT CHIEF FINANCIAL OFFICER

(Title) (Title) (Title)

Subscribed and sworn to before me a. Is this an original filing? Yes [ X ] No [ ]This day of 2015 b. If no 1. State the amendment number

2. Date filed3. Number of pages attached

Statement as of December 31, 2014 of the MMM Healthcare, LLC.

2

ASSETSCurrent Year Prior Year

1 2 3 4Net Admitted

Nonadmitted Assets NetAssets Assets (Cols. 1 - 2) Admitted Assets

1. Bonds (Schedule D)........................................................................................................... ..............150,151,513 .................................... ..............150,151,513 ..............260,546,360

2. Stocks (Schedule D):

2.1 Preferred stocks....................................................................................................... ......................250,000 .................................... ......................250,000 ......................250,000

2.2 Common stocks....................................................................................................... .................................... .................................... .................................0 ....................................

3. Mortgage loans on real estate (Schedule B):

3.1 First liens.................................................................................................................. .................................... .................................... .................................0 ....................................

3.2 Other than first liens................................................................................................. .................................... .................................... .................................0 ....................................

4. Real estate (Schedule A):

4.1 Properties occupied by the company (less $..........0encumbrances)........................................................................................................ .................................... .................................... .................................0 ....................................

4.2 Properties held for the production of income (less $..........0encumbrances)........................................................................................................ .................................... .................................... .................................0 ....................................

4.3 Properties held for sale (less $..........0 encumbrances).......................................... .................................... .................................... .................................0 ....................................

5. Cash ($.....41,718,312, Schedule E-Part 1), cash equivalents ($..........0,Schedule E-Part 2) and short-term investments ($.....3,006,013, Schedule DA)............. .................44,724,325 .................................... .................44,724,325 ...................5,884,613

6. Contract loans (including $..........0 premium notes).......................................................... .................................... .................................... .................................0 ....................................

7. Derivatives (Schedule DB)................................................................................................. .................................... .................................... .................................0 ....................................

8. Other invested assets (Schedule BA)................................................................................ .................................... .................................... .................................0 ....................................

9. Receivables for securities.................................................................................................. .............................909 .................................... .............................909 ..........................1,048

10. Securities lending reinvested collateral assets (Schedule DL)......................................... .................................... .................................... .................................0 ....................................

11. Aggregate write-ins for invested assets............................................................................. ......................600,000 .................................0 ......................600,000 ......................600,000

12. Subtotals, cash and invested assets (Lines 1 to 11)......................................................... ..............195,726,747 .................................0 ..............195,726,747 ..............267,282,021

13. Title plants less $..........0 charged off (for Title insurers only)........................................... .................................... .................................... .................................0 ....................................

14. Investment income due and accrued................................................................................. ......................724,836 .................................... ......................724,836 ...................1,033,630

15. Premiums and considerations:

15.1 Uncollected premiums and agents' balances in the course of collection............... ...................9,420,560 ...................2,371,077 ...................7,049,483 .................12,746,229

15.2 Deferred premiums, agents' balances and installments booked but deferredand not yet due (including $..........0 earned but unbilled premiums)...................... .................................... .................................... .................................0 ....................................

15.3 Accrued retrospective premiums............................................................................. .................................... .................................... .................................0 ....................................

16. Reinsurance:

16.1 Amounts recoverable from reinsurers..................................................................... .................................... .................................... .................................0 ....................................

16.2 Funds held by or deposited with reinsured companies........................................... .................................... .................................... .................................0 ....................................

16.3 Other amounts receivable under reinsurance contracts......................................... .................................... .................................... .................................0 ....................................

17. Amounts receivable relating to uninsured plans................................................................ .................14,266,922 .................................... .................14,266,922 ...................3,546,333

18.1 Current federal and foreign income tax recoverable and interest thereon....................... ...................2,396,210 .................................... ...................2,396,210 ...................2,396,211

18.2 Net deferred tax asset........................................................................................................ .................19,532,987 .................19,532,987 .................................0 ...................1,186,995

19. Guaranty funds receivable or on deposit........................................................................... .................................... .................................... .................................0 ....................................

20. Electronic data processing equipment and software......................................................... .................................... .................................... .................................0 ....................................

21. Furniture and equipment, including health care delivery assets ($..........0)..................... .................................... .................................... .................................0 ....................................

22. Net adjustment in assets and liabilities due to foreign exchange rates............................ .................................... .................................... .................................0 ....................................

23. Receivables from parent, subsidiaries and affiliates......................................................... ...................2,827,705 .................................... ...................2,827,705 ......................377,626

24. Health care ($.....8,234,806) and other amounts receivable............................................. ...................8,234,806 .................................... ...................8,234,806 .................12,895,372

25. Aggregate write-ins for other than invested assets........................................................... .................18,097,940 ...................2,043,133 .................16,054,807 .................12,696,340

26. Total assets excluding Separate Accounts, Segregated Accounts and ProtectedCell Accounts (Lines 12 to 25)........................................................................................... ..............271,228,713 .................23,947,197 ..............247,281,516 ..............314,160,757

27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts............... .................................... .................................... .................................0 ....................................

28. TOTALS (Lines 26 and 27)................................................................................................ ..............271,228,713 .................23,947,197 ..............247,281,516 ..............314,160,757

DETAILS OF WRITE-INS1101. Certificate of Deposit (P.R. Insurance Commissioner's Statutory Deposit....................... ......................600,000 .................................... ......................600,000 ......................600,0001102. ............................................................................................................................................ .................................... .................................... .................................0 ....................................1103. ............................................................................................................................................ .................................... .................................... .................................0 ....................................1198. Summary of remaining write-ins for Line 11 from overflow page...................................... .................................0 .................................0 .................................0 .................................01199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)................................................ ......................600,000 .................................0 ......................600,000 ......................600,0002501. Prepaid Expense................................................................................................................ ........................34,349 ........................34,349 .................................0 ....................................2502. Rent Deposit....................................................................................................................... ......................504,413 ......................504,413 .................................0 ....................................2503. Other Receivable................................................................................................................ ...................3,900,048 ......................917,199 ...................2,982,849 ....................................2598. Summary of remaining write-ins for Line 25 from overflow page...................................... .................13,659,130 ......................587,172 .................13,071,958 .................12,696,3402599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)................................................ .................18,097,940 ...................2,043,133 .................16,054,807 .................12,696,340


3

LIABILITIES, CAPITAL AND SURPLUSCurrent Period Prior Year

1 2 3 4Covered Uncovered Total Total

1. Claims unpaid (less $..........0 reinsurance ceded)........................................................ ................133,024,048 ..................................... ................133,024,048 ................150,068,655

2. Accrued medical incentive pool and bonus amounts.................................................... ....................3,978,155 ..................................... ....................3,978,155 ..................21,612,086

3. Unpaid claims adjustment expenses............................................................................. ....................1,068,119 ..................................... ....................1,068,119 ....................1,292,330

4. Aggregate health policy reserves, including the liability of $..........0 formedical loss ratio rebate per the Public Health Service Act.......................................... ..................15,709,500 ..................................... ..................15,709,500 ....................2,450,000

5. Aggregate life policy reserves........................................................................................ ..................................... ..................................... ..................................0 .....................................

6. Property/casualty unearned premium reserve.............................................................. ..................................... ..................................... ..................................0 .....................................

7. Aggregate health claim reserves................................................................................... ..................................... ..................................... ..................................0 .....................................

8. Premiums received in advance...................................................................................... .......................102,644 ..................................... .......................102,644 ...........................4,092

9. General expenses due or accrued................................................................................ ....................2,363,199 ..................................... ....................2,363,199 ....................6,225,207

10.1 Current federal and foreign income tax payable and interest thereon(including $..........0 on realized capital gains (losses)).................................................. ..................................... ..................................... ..................................0 .....................................

10.2 Net deferred tax liability.................................................................................................. ..................................... ..................................... ..................................0 .....................................

11. Ceded reinsurance premiums payable.......................................................................... ..................................... ..................................... ..................................0 .....................................

12. Amounts withheld or retained for the account of others................................................ ....................1,807,679 ..................................... ....................1,807,679 ....................1,740,412

13. Remittances and items not allocated............................................................................. ..................................... ..................................... ..................................0 .....................................

14. Borrowed money (including $..........0 current) and interestthereon $..........0 (including $..........0 current)............................................................... ..................................... ..................................... ..................................0 .....................................

15. Amounts due to parent, subsidiaries and affiliates........................................................ ..................................... ..................................... ..................................0 ....................6,486,193

16. Derivatives...................................................................................................................... ..................................... ..................................... ..................................0 .....................................

17. Payable for securities..................................................................................................... ..................................... ..................................... ..................................0 .....................................

18. Payable for securities lending........................................................................................ ..................................... ..................................... ..................................0 .....................................

19. Funds held under reinsurance treaties with ($..........0 authorizedreinsurers, $..........0 unauthorized and $..........0 certified reinsurers)........................... ..................................... ..................................... ..................................0 .....................................

20. Reinsurance in unauthorized and certified ($..........0) companies................................ ..................................... ..................................... ..................................0 .....................................

21. Net adjustments in assets and liabilities due to foreign exchange rates...................... ..................................... ..................................... ..................................0 .....................................

22. Liability for amounts held under uninsured plans.......................................................... ..................................... ..................................... ..................................0 .....................................

23. Aggregate write-ins for other liabilities (including $..........0 current)............................. ....................8,914,650 ..................................0 ....................8,914,650 .......................600,000

24. Total liabilities (Lines 1 to 23)........................................................................................ ................166,967,994 ..................................0 ................166,967,994 ................190,478,975

25. Aggregate write-ins for special surplus funds................................................................ .............XXX................. .............XXX................. ..................29,208,000 ..................................0

26. Common capital stock.................................................................................................... .............XXX................. .............XXX................. ...........................2,000 ...........................2,000

27. Preferred capital stock................................................................................................... .............XXX................. .............XXX................. ..................................... .....................................

28. Gross paid in and contributed surplus........................................................................... .............XXX................. .............XXX................. ....................1,999,200 ....................1,999,000

29. Surplus notes................................................................................................................. .............XXX................. .............XXX................. ..................................... .....................................

30. Aggregate write-ins for other than special surplus funds.............................................. .............XXX................. .............XXX................. ..................................0 ..................................0

31. Unassigned funds (surplus)........................................................................................... .............XXX................. .............XXX................. ..................49,104,316 ................121,680,782

32. Less treasury stock at cost:

32.1 .....0.000 shares common (value included in Line 26 $..........0).......................... .............XXX................. .............XXX................. ..................................... .....................................

32.2 .....0.000 shares preferred (value included in Line 27 $..........0)......................... .............XXX................. .............XXX................. ..................................... .....................................

33. Total capital and surplus (Lines 25 to 31 minus Line 32).............................................. .............XXX................. .............XXX................. ..................80,313,516 ................123,681,782

34. Total liabilities, capital and surplus (Lines 24 and 33)................................................... .............XXX................. .............XXX................. ................247,281,510 ................314,160,757

DETAILS OF WRITE-INS

2301. Statutory Liabilities......................................................................................................... .......................600,000 ..................................... .......................600,000 .......................600,000

2302. RAF receivable............................................................................................................... ...................(8,637,483) ..................................... ...................(8,637,483) .....................................

2303. Amount due to CMS....................................................................................................... ..................16,952,133 ..................................... ..................16,952,133 .....................................

2398. Summary of remaining write-ins for Line 23 from overflow page.................................. ..................................0 ..................................0 ..................................0 ..................................0

2399. Totals (Lines 2301 thru 2303 plus 2398) (Line 23 above)............................................ ....................8,914,650 ..................................0 ....................8,914,650 .......................600,000

2501. Health Insurance Industry Fee....................................................................................... .............XXX................. .............XXX................. ..................29,208,000 .....................................

2502. ........................................................................................................................................ .............XXX................. .............XXX................. ..................................... .....................................

2503. ........................................................................................................................................ .............XXX................. .............XXX................. ..................................... .....................................

2598. Summary of remaining write-ins for Line 25 from overflow page.................................. .............XXX................. .............XXX................. ..................................0 ..................................0

2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)............................................ .............XXX................. .............XXX................. ..................29,208,000 ..................................0

3001. ........................................................................................................................................ .............XXX................. .............XXX................. ..................................... .....................................

3002. ........................................................................................................................................ .............XXX................. .............XXX................. ..................................... .....................................

3003. ........................................................................................................................................ .............XXX................. .............XXX................. ..................................... .....................................

3098. Summary of remaining write-ins for Line 30 from overflow page.................................. .............XXX................. .............XXX................. ..................................0 ..................................0

3099. Totals (Lines 3001 thru 3003 plus 3098) (Line 30 above)............................................ .............XXX................. .............XXX................. ..................................0 ..................................0


4

STATEMENT OF REVENUE AND EXPENSESCurrent Year Prior Year

1 2 3Uncovered Total Total

1. Member months............................................................................................................................. ................XXX..................... ..........................1,887,556 ..........................2,285,944

2. Net premium income (including $..........0 non-health premium income)...................................... ................XXX..................... ...................1,423,330,363 ...................1,732,988,517

3. Change in unearned premium reserves and reserve for rate credits........................................... ................XXX..................... ............................................ ............................................

4. Fee-for-service (net of $..........0 medical expenses)..................................................................... ................XXX..................... ............................................ ............................................

5. Risk revenue................................................................................................................................... ................XXX..................... ............................................ ............................................

6. Aggregate write-ins for other health care related revenues.......................................................... ................XXX..................... .........................................0 .........................................0

7. Aggregate write-ins for other non-health revenues....................................................................... ................XXX..................... .........................................0 .........................................0

8. Total revenues (Lines 2 to 7)......................................................................................................... ................XXX..................... ...................1,423,330,363 ...................1,732,988,517

Hospital and Medical:

9. Hospital/medical benefits............................................................................................................... ............................................ ......................481,213,788 ......................486,087,368

10. Other professional services............................................................................................................ ............................................ ......................490,660,628 ......................615,032,000

11. Outside referrals............................................................................................................................. ............................................ ............................................ ............................................

12. Emergency room and out-of-area.................................................................................................. ............................................ ........................25,755,851 ........................29,910,374

13. Prescription drugs.......................................................................................................................... ............................................ ......................208,314,017 ......................274,363,000

14. Aggregate write-ins for other hospital and medical....................................................................... .........................................0 .........................................0 .........................................0

15. Incentive pool, withhold adjustments and bonus amounts............................................................ ............................................ ........................22,810,720 ........................49,482,000

16. Subtotal (Lines 9 to 15).................................................................................................................. .........................................0 ...................1,228,755,004 ...................1,454,874,742

Less:17. Net reinsurance recoveries............................................................................................................ ............................................ ............................................ ............................................

18. Total hospital and medical (Lines 16 minus 17)............................................................................ .........................................0 ...................1,228,755,004 ...................1,454,874,742

19. Non-health claims (net).................................................................................................................. ............................................ ............................................ ............................................

20. Claims adjustment expenses, including $..........0 cost containment expenses............................ ............................................ ............................................ ............................................

21. General administrative expenses................................................................................................... ............................................ ......................223,755,585 ......................232,451,407

22. Increase in reserves for life and accident and health contracts including $..........0increase in reserves for life only)................................................................................................... ............................................ ............................................ ............................................

23. Total underwriting deductions (Lines 18 through 22).................................................................... .........................................0 ...................1,452,510,589 ...................1,687,326,149

24. Net underwriting gain or (loss) (Lines 8 minus 23)........................................................................ ................XXX..................... .......................(29,180,226) ........................45,662,368

25. Net investment income earned (Exhibit of Net Investment Income, Line 17)............................... ............................................ ..........................3,253,138 ..........................3,053,214

26. Net realized capital gains or (losses) less capital gains tax of $..........0....................................... ............................................ ..............................288,758 ..............................106,508

27. Net investment gains or (losses) (Lines 25 plus 26)...................................................................... .........................................0 ..........................3,541,896 ..........................3,159,722

28. Net gain or (loss) from agents' or premium balances charged off [(amount recovered$..........0) (amount charged off $..........0)]..................................................................................... ............................................ ............................................ ............................................

29. Aggregate write-ins for other income or expenses........................................................................ .........................................0 .........................................0 .........................................0

30. Net income or (loss) after capital gains tax and before all other federal income taxes(Lines 24 plus 27 plus 28 plus 29)................................................................................................. ................XXX..................... .......................(25,638,330) ........................48,822,090

31. Federal and foreign income taxes incurred................................................................................... ................XXX..................... ..........................3,308,542 ..........................2,044,099

32. Net income (loss) (Lines 30 minus 31).......................................................................................... ................XXX..................... .......................(28,946,872) ........................46,777,991

DETAILS OF WRITE-INS0601. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0602. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0603. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0698. Summary of remaining write-ins for Line 6 from overflow page.................................................... ................XXX..................... .........................................0 .........................................00699. Totals (Lines 0601 thru 0603 plus 0698) (Line 6 above).............................................................. ................XXX..................... .........................................0 .........................................00701. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0702. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0703. ........................................................................................................................................................ ................XXX..................... ............................................ ............................................0798. Summary of remaining write-ins for Line 7 from overflow page.................................................... ................XXX..................... .........................................0 .........................................00799. Totals (Lines 0701 thru 0703 plus 0798) (Line 7 above).............................................................. ................XXX..................... .........................................0 .........................................01401. ........................................................................................................................................................ ............................................ ............................................ ............................................1402. ........................................................................................................................................................ ............................................ ............................................ ............................................1403. ........................................................................................................................................................ ............................................ ............................................ ............................................1498. Summary of remaining write-ins for Line 14 from overflow page.................................................. .........................................0 .........................................0 .........................................01499. Totals (Lines 1401 thru 1403 plus 1498) (Line 14 above)............................................................ .........................................0 .........................................0 .........................................02901. Other Income.................................................................................................................................. ............................................ ............................................ ............................................2902. Other Income.................................................................................................................................. ............................................ ............................................ ............................................2903. ........................................................................................................................................................ ............................................ ............................................ ............................................2998. Summary of remaining write-ins for Line 29 from overflow page.................................................. .........................................0 .........................................0 .........................................02999. Totals (Lines 2901 thru 2903 plus 2998) (Line 29 above)............................................................ .........................................0 .........................................0 .........................................0


5

STATEMENT OF REVENUE AND EXPENSES (Continued)1 2

CAPITAL AND SURPLUS ACCOUNT Current Year Prior Year

33. Capital and surplus prior reporting period.................................................................................................................................... ......................123,681,783 ........................89,811,407

34. Net income or (loss) from Line 32................................................................................................................................................. .......................(28,946,872) ........................46,777,991

35. Change in valuation basis of aggregate policy and claim reserves............................................................................................. ............................................ ............................................

36. Change in net unrealized capital gains and (losses) less capital gains tax of $.........0.............................................................. ............................................ ............................................

37. Change in net unrealized foreign exchange capital gain or (loss)............................................................................................... ............................................ ............................................

38. Change in net deferred income tax.............................................................................................................................................. ........................18,149,271 .........................(4,650,696)

39. Change in nonadmitted assets..................................................................................................................................................... .......................(20,202,486) ............................(256,919)

40. Change in unauthorized and certified reinsurance...................................................................................................................... ............................................ ............................................

41. Change in treasury stock.............................................................................................................................................................. ............................................ ............................................

42. Change in surplus notes............................................................................................................................................................... ............................................ ............................................

43. Cumulative effect of changes in accounting principles................................................................................................................ ............................................ ............................................

44. Capital changes:

44.1 Paid in.................................................................................................................................................................................. ............................................ ............................................

44.2 Transferred from surplus (Stock Dividend)........................................................................................................................... ............................................ ............................................

44.3 Transferred to surplus.......................................................................................................................................................... ............................................ ............................................

45. Surplus adjustments:

45.1 Paid in.................................................................................................................................................................................. ............................................ ............................................

45.2 Transferred to capital (Stock Dividend)................................................................................................................................ ............................................ ............................................

45.3 Transferred from capital....................................................................................................................................................... ............................................ ............................................

46. Dividends to stockholders............................................................................................................................................................. .......................(12,368,178) .........................(8,000,000)

47. Aggregate write-ins for gains or (losses) in surplus..................................................................................................................... .........................................0 .........................................0

48. Net change in capital and surplus (Lines 34 to 47)...................................................................................................................... .......................(43,368,265) ........................33,870,376

49. Capital and surplus end of reporting period (Line 33 plus 48)..................................................................................................... ........................80,313,518 ......................123,681,783


4701. Net Change Unrealized deppreciation of equity securities.......................................................................................................... ............................................ ............................................

4702. Increase in not Admitted assets.................................................................................................................................................... ............................................ ............................................

4703. Other Surplus Adjustment............................................................................................................................................................. ............................................ ............................................

4798. Summary of remaining write-ins for Line 47 from overflow page................................................................................................ .........................................0 .........................................0

4799. Totals (Lines 4701 thru 4703 plus 4798) (Line 47 above)........................................................................................................... .........................................0 .........................................0


6

CASH FLOW1 2

Current Year Prior Year CASH FROM OPERATIONS

1. Premiums collected net of reinsurance.......................................................................................................................................... ..................1,450,903,221 ..................1,781,136,2422. Net investment income................................................................................................................................................................... .........................4,359,795 .........................3,749,6393. Miscellaneous income.................................................................................................................................................................... ........................................... ...........................................4. Total (Lines 1 through 3)................................................................................................................................................................ ..................1,455,263,016 ..................1,784,885,8815. Benefit and loss related payments................................................................................................................................................. ..................1,270,040,176 ..................1,483,278,4036. Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts.......................................................... ........................................... ...........................................7. Commissions, expenses paid and aggregate write-ins for deductions......................................................................................... .....................232,838,782 .....................224,640,3828. Dividends paid to policyholders..................................................................................................................................................... ........................................... ...........................................9. Federal and foreign income taxes paid (recovered) net of $..........0 tax on capital gains (losses).............................................. ............................341,456 .........................5,164,27310. Total (Lines 5 through 9)................................................................................................................................................................ ..................1,503,220,414 ..................1,713,083,05811. Net cash from operations (Line 4 minus Line 10).......................................................................................................................... ......................(47,957,398) .......................71,802,823

CASH FROM INVESTMENTS12. Proceeds from investments sold, matured or repaid:

12.1 Bonds................................................................................................................................................................................... .....................151,290,688 .......................67,409,47012.2 Stocks................................................................................................................................................................................... ........................................... ...........................................12.3 Mortgage loans.................................................................................................................................................................... ........................................... ...........................................12.4 Real estate........................................................................................................................................................................... ........................................... ...........................................12.5 Other invested assets.......................................................................................................................................................... ........................................... ...........................................12.6 Net gains or (losses) on cash, cash equivalents and short-term investments................................................................... ........................................... ...........................................12.7 Miscellaneous proceeds...................................................................................................................................................... ........................................... ...........................................12.8 Total investment proceeds (Lines 12.1 to 12.7).................................................................................................................. .....................151,290,688 .......................67,409,470

13. Cost of investments acquired (long-term only):13.1 Bonds................................................................................................................................................................................... .......................41,404,807 .....................182,288,76913.2 Stocks................................................................................................................................................................................... ........................................... ............................345,75713.3 Mortgage loans.................................................................................................................................................................... ........................................... ...........................................13.4 Real estate........................................................................................................................................................................... ........................................... ...........................................13.5 Other invested assets.......................................................................................................................................................... ........................................... ...........................................13.6 Miscellaneous applications.................................................................................................................................................. ........................................... ...........................................13.7 Total investments acquired (Lines 13.1 to 13.6)................................................................................................................. .......................41,404,807 .....................182,634,526

14. Net increase (decrease) in contract loans and premium notes..................................................................................................... ........................................... ...........................................15. Net cash from investments (Line 12.8 minus Lines 13.7 minus Line 14)..................................................................................... .....................109,885,881 ....................(115,225,056)

CASH FROM FINANCING AND MISCELLANEOUS SOURCES16. Cash provided (applied):

16.1 Surplus notes, capital notes................................................................................................................................................. ........................................... ...........................................16.2 Capital and paid in surplus, less treasury stock.................................................................................................................. ........................................... ...........................................16.3 Borrowed funds.................................................................................................................................................................... ........................................... ...........................................16.4 Net deposits on deposit-type contracts and other insurance liabilities............................................................................... ........................................... ...........................................16.5 Dividends to stockholders.................................................................................................................................................... .......................12,368,178 .........................8,000,00016.6 Other cash provided (applied)............................................................................................................................................. ......................(10,720,593) ........................(2,018,660)

17. Net cash from financing and miscellaneous sources (Lines 16.1 to 16.4 minus Line 16.5 plus Line 16.6)................................. ......................(23,088,771) ......................(10,018,660)

RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS18. Net change in cash, cash equivalents and short-term investments (Line 11 plus Line 15 plus Line 17).................................... .......................38,839,712 ......................(53,440,893)19. Cash, cash equivalents and short-term investments:

19.1 Beginning of year................................................................................................................................................................. .........................5,884,613 .......................59,325,506

19.2 End of year (Line 18 plus Line 19.1)................................................................................................................................... .......................44,724,325 .........................5,884,613

Note: Supplemental disclosures of cash flow information for non-cash transactions:20.0001 .............................................................................................................................................................................................. ........................................... ...........................................


7

ANALYSIS OF OPERATIONS BY LINES OF BUSINESS1 2 3 4 5 6 7 8 9 10

FederalComprehensive Employees Title Title

(Hospital Medicare Dental Vision Health XVIII XIX Other OtherTotal and Medical) Supplement Only Only Benefits Plans Medicare Medicaid Health Non-Health

1. Net premium income................................................................................................................ ..........1,423,330,363 ................................... ................................... ................................... ................................... ................................... ..........1,423,330,363 ................................... ................................... ...................................2. Change in unearned premium reserves and reserve for rate credit....................................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...................................3. Fee-for-service (net of $..........0 medical expenses)............................................................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................4. Risk revenue............................................................................................................................ ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................5. Aggregate write-ins for other health care related revenues.................................................... ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................6. Aggregate write-ins for other non-health care related revenues............................................ ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...............................07. Total revenues (Lines 1 to 6)................................................................................................... ..........1,423,330,363 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ..........1,423,330,363 ...............................0 ...............................0 ...............................08. Hospital/medical benefits......................................................................................................... .............481,213,788 ................................... ................................... ................................... ................................... ................................... .............481,213,788 ................................... ................................... ...........XXX................9. Other professional services..................................................................................................... .............490,660,628 ................................... ................................... ................................... ................................... ................................... .............490,660,628 ................................... ................................... ...........XXX................10. Outside referrals....................................................................................................................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................11. Emergency room and out-of-area............................................................................................ ...............25,755,851 ................................... ................................... ................................... ................................... ................................... ...............25,755,851 ................................... ................................... ...........XXX................12. Prescription drugs.................................................................................................................... .............208,314,017 ................................... ................................... ................................... ................................... ................................... .............208,314,017 ................................... ................................... ...........XXX................13. Aggregate write-ins for other hospital and medical................................................................. ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................14. Incentive pool, withhold adjustments and bonus amounts..................................................... ...............22,810,720 ................................... ................................... ................................... ................................... ................................... ...............22,810,720 ................................... ................................... ...........XXX................15. Subtotal (Lines 8 to 14)............................................................................................................ ..........1,228,755,004 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ..........1,228,755,004 ...............................0 ...............................0 ...........XXX................16. Net reinsurance recoveries...................................................................................................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................17. Total hospital and medical (Lines 15 minus 16)...................................................................... ..........1,228,755,004 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ..........1,228,755,004 ...............................0 ...............................0 ...........XXX................18. Non-health claims (net)............................................................................................................ ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...................................19. Claims adjustment expenses including $..........0 cost containment expenses....................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...................................20. General administrative expenses............................................................................................ .............223,755,585 ................................... ................................... ................................... ................................... ................................... .............223,755,585 ................................... ................................... ...................................21. Increase in reserves for accident and health contracts........................................................... ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................22. Increase in reserve for life contracts........................................................................................ ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...................................23. Total underwriting deductions (Lines 17 to 22)....................................................................... ..........1,452,510,589 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ..........1,452,510,589 ...............................0 ...............................0 ...............................024. Net underwriting gain or (loss) (Line 7 minus Line 23)........................................................... ..............(29,180,226) ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ..............(29,180,226) ...............................0 ...............................0 ...............................0

DETAILS OF WRITE-INS0501. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................0502. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................0503. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................0598. Summary of remaining write-ins for Line 5 from overflow page.............................................. ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................0599. Total (Lines 0501 thru 0503 plus 0598) (Line 5 above).......................................................... ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................0601. .................................................................................................................................................. ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...................................0602. .................................................................................................................................................. ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...................................0603. .................................................................................................................................................. ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...................................0698. Summary of remaining write-ins for Line 6 from overflow page.............................................. ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...............................00699. Total (Lines 0601 thru 0603 plus 0698) (Line 6 above).......................................................... ...............................0 ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...........XXX................ ...............................01301. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................1302. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................1303. .................................................................................................................................................. ...............................0 ................................... ................................... ................................... ................................... ................................... ................................... ................................... ................................... ...........XXX................1398. Summary of remaining write-ins for Line 13 from overflow page............................................ ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................1399. Total (Lines 1301 thru 1303 plus 1398) (Line 13 above)........................................................ ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...............................0 ...........XXX................


8

UNDERWRITING AND INVESTMENT EXHIBITPART 1 - PREMIUMS

1 2 3 4

Net PremiumDirect Reinsurance Reinsurance Income

Line of Business Business Assumed Ceded (Cols. 1 + 2 - 3)

1. Comprehensive (hospital and medical)...................................... ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

2. Medicare supplement................................................................. ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

3. Dental only................................................................................. ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

4. Vision only.................................................................................. ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

5. Federal employees health benefits plan.................................... ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

6. Title XVIII - Medicare................................................................. ....................................................................................................................................................................................... ...............................1,423,330,363 ....................................................... ....................................................... ...............................1,423,330,363

7. Title XIX - Medicaid.................................................................... ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

8. Other health............................................................................... ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

9. Health subtotal (Lines 1 through 8)............................................ ....................................................................................................................................................................................... ...............................1,423,330,363 ....................................................0 ....................................................0 ...............................1,423,330,363

10. Life............................................................................................. ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

11. Property/casualty....................................................................... ....................................................................................................................................................................................... ....................................................... ....................................................... ....................................................... ....................................................0

12. Totals (Lines 9 to 11)................................................................. ....................................................................................................................................................................................... ...............................1,423,330,363 ....................................................0 ....................................................0 ...............................1,423,330,363


9

UNDERWRITING AND INVESTMENT EXHIBITPART 2 - CLAIMS INCURRED DURING THE YEAR

1 2 3 4 5 6 7 8 9 10Federal

Comprehensive Employees Title Title(Hospital Medicare Dental Vision Health XVIII XIX Other Other

Total and Medical) Supplement Only Only Benefits Plan Medicare Medicaid Health Non-Health1. Payments during the year:

1.1 Direct.................................................................................................................... ...........1,231,223,692 .................................... .................................... .................................... .................................... .................................... ...........1,231,223,692 .................................... .................................... ....................................1.2 Reinsurance assumed......................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................1.3 Reinsurance ceded............................................................................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................1.4 Net....................................................................................................................... ...........1,231,223,692 .................................0 .................................0 .................................0 .................................0 .................................0 ...........1,231,223,692 .................................0 .................................0 .................................0

2. Paid medical incentive pools and bonuses................................................................... ................40,444,651 .................................... .................................... .................................... .................................... .................................... ................40,444,651 .................................... .................................... ....................................3. Claim liability December 31, current year from Part 2A:

3.1 Direct.................................................................................................................... ..............133,024,048 .................................... .................................... .................................... .................................... .................................... ..............133,024,048 .................................... .................................... ....................................3.2 Reinsurance assumed......................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................3.3 Reinsurance ceded............................................................................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................3.4 Net....................................................................................................................... ..............133,024,048 .................................0 .................................0 .................................0 .................................0 .................................0 ..............133,024,048 .................................0 .................................0 .................................0

4. Claim reserve December 31, current year from Part 2D:4.1 Direct.................................................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................4.2 Reinsurance assumed......................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................4.3 Reinsurance ceded............................................................................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................4.4 Net....................................................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0

5. Accrued medical incentive pools and bonuses, current year....................................... ..................3,978,155 .................................... .................................... .................................... .................................... .................................... ..................3,978,155 .................................... .................................... ....................................6. Net healthcare receivables (a)...................................................................................... ..................8,234,806 .................................... .................................... .................................... .................................... .................................... ..................8,234,806 .................................... .................................... ....................................7. Amounts recoverable from reinsurers December 31, current year.............................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................8. Claim liability December 31, prior year from Part 2A:

8.1 Direct.................................................................................................................... ..............150,068,655 .................................... .................................... .................................... .................................... .................................... ..............150,068,655 .................................... .................................... ....................................8.2 Reinsurance assumed......................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................8.3 Reinsurance ceded............................................................................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................8.4 Net....................................................................................................................... ..............150,068,655 .................................0 .................................0 .................................0 .................................0 .................................0 ..............150,068,655 .................................0 .................................0 .................................0

9. Claim reserve December 31, prior year from Part 2D:9.1 Direct.................................................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................9.2 Reinsurance assumed......................................................................................... .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................9.3 Reinsurance ceded............................................................................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................9.4 Net....................................................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0

10. Accrued medical incentive pools and bonuses, prior year........................................... ................21,612,086 .................................... .................................... .................................... .................................... .................................... ................21,612,086 .................................... .................................... ....................................11. Amounts recoverable from reinsurers December 31, prior year.................................. .................................0 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ....................................12. Incurred benefits:

12.1 Direct.................................................................................................................... ...........1,205,944,279 .................................0 .................................0 .................................0 .................................0 .................................0 ...........1,205,944,279 .................................0 .................................0 .................................012.2 Reinsurance assumed......................................................................................... .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................012.3 Reinsurance ceded............................................................................................. .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................0 .................................012.4 Net....................................................................................................................... ...........1,205,944,279 .................................0 .................................0 .................................0 .................................0 .................................0 ...........1,205,944,279 .................................0 .................................0 .................................0

13. Incurred medical incentive pools and bonuses............................................................. ................22,810,720 .................................0 .................................0 .................................0 .................................0 .................................0 ................22,810,720 .................................0 .................................0 .................................0(a) Excludes $..........0 loans or advances to providers not yet expensed.


10

UNDERWRITING AND INVESTMENT EXHIBITPART 2A - CLAIMS LIABILITY END OF CURRENT YEAR

1 2 3 4 5 6 7 8 9 10Federal

Comprehensive Employees Title Title(Medical Medicare Dental Vision Health XVIII XIX Other Other

Total and Hospital) Supplement Only Only Benefits Plan Medicare Medicaid Health Non-Health

1. Reported in process of adjustment:1.1 Direct............................................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................1.2 Reinsurance assumed.................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................1.3 Reinsurance ceded......................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................1.4 Net................................................................................................... ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0

2. Incurred but unreported:2.1 Direct............................................................................................... ................133,024,048 ...................................... ...................................... ...................................... ...................................... ...................................... ................133,024,048 ...................................... ...................................... ......................................2.2 Reinsurance assumed.................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................2.3 Reinsurance ceded......................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................2.4 Net................................................................................................... ................133,024,048 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ................133,024,048 ...................................0 ...................................0 ...................................0

3. Amounts withheld from paid claims and capitations:3.1 Direct............................................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................3.2 Reinsurance assumed.................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................3.3 Reinsurance ceded......................................................................... ...................................0 ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ...................................... ......................................3.4 Net................................................................................................... ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0

4. Totals:4.1 Direct............................................................................................... ................133,024,048 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ................133,024,048 ...................................0 ...................................0 ...................................04.2 Reinsurance assumed.................................................................... ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................04.3 Reinsurance ceded......................................................................... ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ...................................04.4 Net................................................................................................... ................133,024,048 ...................................0 ...................................0 ...................................0 ...................................0 ...................................0 ................133,024,048 ...................................0 ...................................0 ...................................0


11

UNDERWRITING AND INVESTMENT EXHIBITPART 2B - ANALYSIS OF CLAIMS UNPAID - PRIOR YEAR - NET OF REINSURANCE

Claims Paid Claim Reserve and Claim Liability 5 6During the Year December 31 of Current Year Estimated Claim

1 2 3 4 Reserve andOn Claims Incurred On Claims On Claims Unpaid On Claims Claims Incurred Claim LiabilityPrior to January 1 Incurred During December 31 of Incurred During in Prior Years December 31 of

Line of Business of Current Year the Year Prior Year the Year (Columns 1 + 3) Prior Year

1. Comprehensive (hospital and medical)................................................................................................................................................ ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

2. Medicare supplement........................................................................................................................................................................... ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

3. Dental only........................................................................................................................................................................................... ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

4. Vision only............................................................................................................................................................................................ ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

5. Federal employees health benefits plan.............................................................................................................................................. ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

6. Title XVIII - Medicare........................................................................................................................................................................... ............................111,623,923 .........................1,111,364,968 ................................5,541,123 ............................127,482,925 ............................117,165,046 ............................150,068,314

7. Title XIX - Medicaid.............................................................................................................................................................................. ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

8. Other health......................................................................................................................................................................................... ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

9. Health subtotal (Lines 1 to 8)............................................................................................................................................................... ............................111,623,923 .........................1,111,364,968 ................................5,541,123 ............................127,482,925 ............................117,165,046 ............................150,068,314

10. Healthcare receivables (a)................................................................................................................................................................... ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

11. Other non-health.................................................................................................................................................................................. ................................................. ................................................. ................................................. ................................................. ..............................................0 .................................................

12. Medical incentive pools and bonus amounts....................................................................................................................................... ..............................27,148,011 ..............................13,296,640 ...............................(1,101,316) ................................5,079,471 ..............................26,046,695 ..............................21,612,086

13. Totals (Lines 9 - 10 + 11 + 12)............................................................................................................................................................. ............................138,771,934 .........................1,124,661,608 ................................4,439,807 ............................132,562,396 ............................143,211,741 ............................171,680,400

(a) Excludes $..........0 loans or advances to providers not yet expensed.


12.GT

UNDERWRITING AND INVESTMENT EXHIBITPART 2C - DEVELOPMENT OF PAID AND INCURRED CLAIMS

(000 Omitted)

SECTION A - PAID HEALTH CLAIMS - GRAND TOTALCumulative Net Amounts Paid

Year in Which Losses 1 2 3 4 5Were Incurred 2010 2011 2012 2013 2014

1. Prior................................................................................................................................................................................................... ........................................................... ........................................................... ........................................................... ........................................................... ...........................................................

2. 2010................................................................................................................................................................................................... ........................................................... ........................................................... ........................................................... ........................................................... ...........................................................

3. 2011................................................................................................................................................................................................... .........................XXX........................... ........................................................... ........................................................... ........................................................... ...........................................................

4. 2012................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... ........................................................... ........................................................... ...........................................................

5. 2013................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... .........................XXX........................... ........................................................... ...........................................................

6. 2014................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... .........................XXX........................... .........................XXX........................... ...........................................................

NONE

SECTION B - INCURRED HEALTH CLAIMS - GRAND TOTALSum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year


1. Prior................................................................................................................................................................................................... ........................................................... ........................................................... ........................................................... ........................................................... ...........................................................

2. 2010................................................................................................................................................................................................... ........................................................... ........................................................... ........................................................... ........................................................... ...........................................................

3. 2011................................................................................................................................................................................................... .........................XXX........................... ........................................................... ........................................................... ........................................................... ...........................................................

4. 2012................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... ........................................................... ........................................................... ...........................................................

5. 2013................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... .........................XXX........................... ........................................................... ...........................................................

6. 2014................................................................................................................................................................................................... .........................XXX........................... .........................XXX........................... .........................XXX........................... .........................XXX........................... ...........................................................

NONE

SECTION C - INCURRED YEAR HEALTH CLAIM AND CLAIM ADJUSTMENT EXPENSE RATIO - GRAND TOTAL1 2 3 4 5 6 7 8 9 10

Claim and Claim Total Claims andYears in Which Adjustment Unpaid Claim Claims Adjustment

Premiums were Earned and Premiums Claim Claim Adjustment Percent Expense Payments Percent Claims Adjustment Expense Incurred PercentClaims were Incurred Earned Payments Expense Payments (Col. 3/2) (Col. 2 + 3) (Col. 5/1) Unpaid Expense (Col. 5 + 7 + 8) (Col. 9/1)

1. 2010............................................... ..........................1,328,296 ..........................1,080,741 ........................................... .....................................0.0 ..........................1,080,741 ...................................81.4 ........................................... ........................................... ..........................1,080,741 ...................................81.4

2. 2011............................................... ..........................1,531,826 ..........................1,272,468 ........................................... .....................................0.0 ..........................1,272,468 ...................................83.1 ........................................... ........................................... ..........................1,272,468 ...................................83.1

3. 2012............................................... ..........................1,698,280 ..........................1,223,609 ........................................... .....................................0.0 ..........................1,223,609 ...................................72.0 ........................................... ........................................... ..........................1,223,609 ...................................72.0

4. 2013............................................... ..........................1,732,988 ..........................1,483,278 ........................................... .....................................0.0 ..........................1,483,278 ...................................85.6 ........................................... ........................................... ..........................1,483,278 ...................................85.6

5. 2014............................................... ..........................1,423,330 ..........................1,124,661 ........................................... .....................................0.0 ..........................1,124,661 ...................................79.0 .............................137,002 .................................1,068 ..........................1,262,731 ...................................88.7


12.HM


(000 Omitted)

SECTION A - PAID HEALTH CLAIMS - HOSPITAL AND MEDICALCumulative Net Amounts Paid


1. Prior.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

2. 2010.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

3. 2011.......................................................................................................................................................................................................... .......................XXX........................... ......................................................... ......................................................... ......................................................... .........................................................

4. 2012.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... ......................................................... ......................................................... .........................................................

5. 2013.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... ......................................................... .........................................................

6. 2014.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .........................................................

NONE

SECTION B - INCURRED HEALTH CLAIMS - HOSPITAL AND MEDICALSum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year


1. Prior.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

2. 2010.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

3. 2011.......................................................................................................................................................................................................... .......................XXX........................... ......................................................... ......................................................... ......................................................... .........................................................

4. 2012.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... ......................................................... ......................................................... .........................................................

5. 2013.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... ......................................................... .........................................................

6. 2014.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .........................................................

NONE

SECTION C - INCURRED YEAR HEALTH CLAIM AND CLAIM ADJUSTMENT EXPENSE RATIO - HOSPITAL AND MEDICAL1 2 3 4 5 6 7 8 9 10


Premiums were Earned and Premiums Claim Claim Adjustment Percent Expense Payments Percent Claims Adjustment Expense Incurred PercentClaims were Incurred Earned Payments Expense Payments (Col. 3/2) (Col. 2 + 3) (Col. 5/1) Unpaid Expenses (Col. 5 + 7 + 8) (Col. 9/1)

1. 2010..................................................... .......................................... .......................................... .......................................... ....................................0.0 .......................................0 ....................................0.0 .......................................... .......................................... .......................................0 ....................................0.0

2. 2011..................................................... .......................................... .......................................... .......................................... ....................................0.0 .......................................0 ....................................0.0 .......................................... .......................................... .......................................0 ....................................0.0

3. 2012..................................................... .......................................... .......................................... .......................................... ....................................0.0 .......................................0 ....................................0.0 .......................................... .......................................... .......................................0 ....................................0.0

4. 2013..................................................... .......................................... .......................................... .......................................... ....................................0.0 .......................................0 ....................................0.0 .......................................... .......................................... .......................................0 ....................................0.0

5. 2014..................................................... .......................................... .......................................... .......................................... ....................................0.0 .......................................0 ....................................0.0 ............................137,002 ................................1,068 ............................138,070 ....................................0.0


12.MS, 12.DO, 12.VO, 12.FE

U & I Ex.-Pt.2C-Sn A-Paid Claims-Medicare Supp.NONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-Medicare Supp.NONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-Medicare Supp.NONE

U & I Ex.-Pt.2C-Sn A-Paid Claims-DentalNONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-DentalNONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-DentalNONE

U & I Ex.-Pt.2C-Sn A-Paid Claims-VisionNONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-VisionNONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-VisionNONE

U & I Ex.-Pt.2C-Sn A-Paid Claims-Fed Emp HealthNONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-Fed Emp HealthNONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-Fed Emp HealthNONE


12.XV


(000 Omitted)

SECTION A - PAID HEALTH CLAIMS - TITLE XVIII - MEDICARECumulative Net Amounts Paid


1. Prior.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

2. 2010.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

3. 2011.......................................................................................................................................................................................................... .......................XXX........................... ......................................................... ......................................................... ......................................................... .........................................................

4. 2012.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... ......................................................... ......................................................... .........................................................

5. 2013.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... ......................................................... .........................................................

6. 2014.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .........................................................

NONE

SECTION B - INCURRED HEALTH CLAIMS - TITLE XVIII - MEDICARESum of Cumulative Net Amount Paid and Claim Liability, Claim Reserve and Medical Incentive Pool and Bonuses Outstanding at End of Year


1. Prior.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

2. 2010.......................................................................................................................................................................................................... ......................................................... ......................................................... ......................................................... ......................................................... .........................................................

3. 2011.......................................................................................................................................................................................................... .......................XXX........................... ......................................................... ......................................................... ......................................................... .........................................................

4. 2012.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... ......................................................... ......................................................... .........................................................

5. 2013.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... ......................................................... .........................................................

6. 2014.......................................................................................................................................................................................................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .......................XXX........................... .........................................................

NONE

SECTION C - INCURRED YEAR HEALTH CLAIM AND CLAIM ADJUSTMENT EXPENSE RATIO - TITLE XVIII - MEDICARE1 2 3 4 5 6 7 8 9 10


Premiums were Earned and Premiums Claim Claim Adjustment Percent Expense Payments Percent Claims Adjustment Expense Incurred PercentClaims were Incurred Earned Payments Expense Payments (Col. 3/2) (Col. 2 + 3) (Col. 5/1) Unpaid Expenses (Col. 5 + 7 + 8) (Col. 9/1)

1. 2010..................................................... .........................1,328,296 .........................1,080,741 .......................................... ....................................0.0 .........................1,080,741 ..................................81.4 .......................................... .......................................... .........................1,080,741 ..................................81.4

2. 2011..................................................... .........................1,531,826 .........................1,272,468 .......................................... ....................................0.0 .........................1,272,468 ..................................83.1 .......................................... .......................................... .........................1,272,468 ..................................83.1

3. 2012..................................................... .........................1,698,280 .........................1,223,609 .......................................... ....................................0.0 .........................1,223,609 ..................................72.0 .......................................... .......................................... .........................1,223,609 ..................................72.0

4. 2013..................................................... .........................1,732,988 .........................1,483,278 .......................................... ....................................0.0 .........................1,483,278 ..................................85.6 .......................................... .......................................... .........................1,483,278 ..................................85.6

5. 2014..................................................... .........................1,423,330 .........................1,124,661 .......................................... ....................................0.0 .........................1,124,661 ..................................79.0 ............................137,002 ................................1,068 .........................1,262,731 ..................................88.7


12.XI, 12.OT

U & I Ex.-Pt.2C-Sn A-Paid Claims-MedicaidNONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-MedicaidNONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-MedicaidNONE

U & I Ex.-Pt.2C-Sn A-Paid Claims-OtherNONE

U & I Ex.-Pt.2C-Sn B-Incurred Claims-OtherNONE

U & I Ex.-Pt.2C-Sn C-Expense Ratio-OtherNONE


13

UNDERWRITING AND INVESTMENT EXHIBITPART 2D - AGGREGATE RESERVE FOR ACCIDENT AND HEALTH CONTRACTS ONLY

1 2 3 4 5 6 7 8 9Federal

Comprehensive Employees Title Title(Hospital Medicare Dental Vision Health XVIII XIX

Total and Medical) Supplement Only Only Benefits Plan Medicare Medicaid Other

1. Unearned premium reserves............................................................................... ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

2. Additional policy reserves (a).............................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

3. Reserve for future contingent benefits................................................................ ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

4. Reserve for rate credits or experience rating refunds(including $..........0) for investment income........................................................ ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

5. Aggregate write-ins for other policy reserves..................................................... .....................15,709,500 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 .....................15,709,500 ......................................0 ......................................0

6. Totals (gross)....................................................................................................... .....................15,709,500 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 .....................15,709,500 ......................................0 ......................................0

7. Reinsurance ceded............................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

8. Totals (net) (Page 3, Line 4)............................................................................... .....................15,709,500 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 .....................15,709,500 ......................................0 ......................................0

9. Present value of amounts not yet due on claims................................................ ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

10. Reserve for future contingent benefits................................................................ ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

11. Aggregate write-ins for other claim reserves...................................................... ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0

12. Totals (gross)....................................................................................................... ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0

13. Reinsurance ceded............................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

14. Totals (net) (Page 3, Line 7)............................................................................... ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0


0501. Aggregate Health Policy Reserve....................................................................... .....................15,709,500 ......................................... ......................................... ......................................... ......................................... ......................................... .....................15,709,500 ......................................... .........................................

0502. ............................................................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

0503. ............................................................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

0598. Summary of remaining write-ins for Line 5 from overflow page......................... ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0

0599. Totals (Lines 0501 thru 0503 plus 0598) (Line 5 above).................................... .....................15,709,500 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 .....................15,709,500 ......................................0 ......................................0

1101. ............................................................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

1102. ............................................................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

1103. ............................................................................................................................. ......................................0 ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... ......................................... .........................................

1198. Summary of remaining write-ins for Line 11 from overflow page....................... ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0

1199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)................................. ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0 ......................................0

(a) Includes $..........0 premium deficiency reserve.


14

UNDERWRITING AND INVESTMENT EXHIBITPART 3 - ANALYSIS OF EXPENSES

Claim Adjustment Expenses 3 4 51 2

Cost Other Claim GeneralContainment Adjustment Administrative Investment

Expenses Expenses Expenses Expenses Total

1. Rent ($..........0 for occupancy of own building).................................................................. .............................. .............................. ............3,678,635 .............................. ............3,678,635

2. Salaries, wages and other benefits.................................................................................... .............................. .............................. ..........67,076,273 .............................. ..........67,076,273

3. Commissions (less $..........0 ceded plus $..........0 assumed)............................................ .............................. .............................. ............7,658,687 .............................. ............7,658,687

4. Legal fees and expenses.................................................................................................... .............................. .............................. ............1,479,923 .............................. ............1,479,923

5. Certifications and accreditation fees................................................................................... .............................. .............................. ...............166,688 .............................. ...............166,688

6. Auditing, actuarial and other consulting services............................................................... .............................. .............................. ............5,953,158 .............................. ............5,953,158

7. Traveling expenses............................................................................................................. .............................. .............................. ...............311,828 .............................. ...............311,828

8. Marketing and advertising................................................................................................... .............................. .............................. ............5,829,709 .............................. ............5,829,709

9. Postage, express and telephone........................................................................................ .............................. .............................. ............7,803,973 .............................. ............7,803,973

10. Printing and office supplies................................................................................................. .............................. .............................. ...............314,279 .............................. ...............314,279

11. Occupancy, depreciation and amortization........................................................................ .............................. .............................. ..........10,334,929 .............................. ..........10,334,929

12. Equipment........................................................................................................................... .............................. .............................. ..................16,959 .............................. ..................16,959

13. Cost or depreciation of EDP equipment and software....................................................... .............................. .............................. .............................. .............................. ...........................0

14. Outsourced services including EDP, claims, and other services....................................... .............................. .............................. .............................. .............................. ...........................0

15. Boards, bureaus and association fees............................................................................... .............................. .............................. .............................. .............................. ...........................0

16. Insurance, except on real estate......................................................................................... .............................. .............................. ...............748,958 .............................. ...............748,958

17. Collection and bank service charges.................................................................................. .............................. .............................. .............................. .............................. ...........................0

18. Group service and administration fees............................................................................... .............................. .............................. .............................. .............................. ...........................0

19. Reimbursements by uninsured plans................................................................................. .............................. .............................. .............................. .............................. ...........................0

20. Reimbursements from fiscal intermediaries....................................................................... .............................. .............................. .............................. .............................. ...........................0

21. Real estate expenses......................................................................................................... .............................. .............................. ............1,365,115 .............................. ............1,365,115

22. Real estate taxes................................................................................................................ .............................. .............................. ...............426,284 .............................. ...............426,284

23. Taxes, licenses and fees:

23.1 State and local insurance taxes................................................................................. .............................. .............................. .............................. .............................. ...........................0

23.2 State premium taxes.................................................................................................. .............................. .............................. .............................. .............................. ...........................0

23.3 Regulatory authority licenses and fees..................................................................... .............................. .............................. .............................. .............................. ...........................0

23.4 Payroll taxes............................................................................................................... .............................. .............................. .............................. .............................. ...........................0

23.5 Other (excluding federal income and real estate taxes)........................................... .............................. .............................. ............2,929,767 .............................. ............2,929,767

24. Investment expenses not included elsewhere................................................................... .............................. .............................. .............................. .............................. ...........................0

25. Aggregate write-ins for expenses....................................................................................... ...........................0 ...........................0 ........107,660,418 ...........................0 ........107,660,418

26. Total expenses incurred (Lines 1 to 25)............................................................................. ...........................0 ...........................0 ........223,755,583 ...........................0 (a)....223,755,583

27. Less expenses unpaid December 31, current year............................................................ .............................. .............................. ............2,363,199 .............................. ............2,363,199

28. Add expenses unpaid December 31, prior year................................................................. .............................. .............................. ............6,225,207 .............................. ............6,225,207

29. Amounts receivable relating to uninsured plans, prior year............................................... .............................. .............................. .............................. .............................. ...........................0

30. Amounts receivable relating to uninsured plans, current year........................................... .............................. .............................. .............................. .............................. ...........................0

31. Total expenses paid (Lines 26 minus 27 plus 28 minus 29 plus 30)................................. ...........................0 ...........................0 ........227,617,591 ...........................0 ........227,617,591


2501. Public & Provider Relations................................................................................................ .............................. .............................. ............2,170,104 .............................. ............2,170,104

2502. Data Process,Special Projects & Other Expenses............................................................. .............................. .............................. ..........14,765,926 .............................. ..........14,765,926

2503. Corp Allocation, Stock Options, Interest and Bad Debt & Industry Fee............................ .............................. .............................. ..........90,724,388 .............................. ..........90,724,388

2598. Summary of remaining write-ins for Line 25 from overflow page....................................... ...........................0 ...........................0 ...........................0 ...........................0 ...........................0

2599. TOTALS (Lines 2501 thru 2503 plus 2598) (Line 25 above)............................................. ...........................0 ...........................0 ........107,660,418 ...........................0 ........107,660,418

(a) Includes management fees of $...........0 to affiliates and $..........0 to non-affiliates.


15

EXHIBIT OF NET INVESTMENT INCOME1 2

Collected EarnedDuring Year During Year

1. U.S. government bonds.............................................................................................................................................................. (a)................................250,678 .....................................230,4051.1 Bonds exempt from U.S. tax....................................................................................................................................................... (a)............................................... ...................................................1.2 Other bonds (unaffiliated)........................................................................................................................................................... (a).............................3,469,470 .................................3,022,5411.3 Bonds of affiliates........................................................................................................................................................................ (a)............................................... ...................................................2.1 Preferred stocks (unaffiliated)..................................................................................................................................................... (b)............................................... ...................................................

2.11 Preferred stocks of affiliates........................................................................................................................................................ (b)............................................... ...................................................2.2 Common stocks (unaffiliated)..................................................................................................................................................... ................................................... ...................................................

2.21 Common stocks of affiliates........................................................................................................................................................ ................................................... ...................................................3. Mortgage loans........................................................................................................................................................................... (c)............................................... ...................................................4. Real estate.................................................................................................................................................................................. (d)............................................... ...................................................5. Contract loans............................................................................................................................................................................. ................................................... ...................................................6. Cash, cash equivalents and short-term investments................................................................................................................. (e).......................................188 ............................................1927. Derivative instruments................................................................................................................................................................ (f)................................................ ...................................................8. Other invested assets................................................................................................................................................................. ................................................... ...................................................9. Aggregate write-ins for investment income................................................................................................................................ ................................................0 ................................................010. Total gross investment income................................................................................................................................................... .................................3,720,336 .................................3,253,13811. Investment expenses........................................................................................................................................................................................................................ (g)...............................................12. Investment taxes, licenses and fees, excluding federal income taxes............................................................................................................................................ (g)...............................................13. Interest expense............................................................................................................................................................................................................................... (h)...............................................14. Depreciation on real estate and other invested assets.................................................................................................................................................................... (i).............................................015. Aggregate write-ins for deductions from investment income........................................................................................................................................................... ................................................016. Total deductions (Lines 11 through 15)........................................................................................................................................................................................... ................................................017. Net investment income (Line 10 minus Line 16).............................................................................................................................................................................. .................................3,253,138

DETAILS OF WRITE-INS0901. ..................................................................................................................................................................................................... ................................................... ...................................................0902. ..................................................................................................................................................................................................... ................................................... ...................................................0903. ..................................................................................................................................................................................................... ................................................... ...................................................0998. Summary of remaining write-ins for Line 9 from overflow page................................................................................................ ................................................0 ................................................00999. Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)........................................................................................................... ................................................0 ................................................01501. .......................................................................................................................................................................................................................................................... ...................................................1502. .......................................................................................................................................................................................................................................................... ...................................................1503. .......................................................................................................................................................................................................................................................... ...................................................1598. Summary of remaining write-ins for Line 15 from overflow page.................................................................................................................................................... ................................................01599. Totals (Lines 1501 thru 1503 plus 1598) (Line 15 above)............................................................................................................................................................... ................................................0

(a) Includes $.....100,217 accrual of discount less $.....898,080 amortization of premium and less $.....53,393 paid for accrued interest on purchases.(b) Includes $..........0 accrual of discount less $..........0 amortization of premium and less $..........0 paid for accrued dividends on purchases.(c) Includes $..........0 accrual of discount less $..........0 amortization of premium and less $..........0 paid for accrued interest on purchases.(d) Includes $..........0 for company's occupancy of its own buildings; and excludes $..........0 interest on encumbrances.(e) Includes $..........0 accrual of discount less $..........0 amortization of premium and less $..........0 paid for accrued interest on purchases.(f) Includes $..........0 accrual of discount less $..........0 amortization of premium.(g) Includes $..........0 investment expenses and $..........0 investment taxes, licenses and fees, excluding federal income taxes, attributable to Segregated and Separate Accounts.(h) Includes $..........0 interest on surplus notes and $..........0 interest on capital notes.(i) Includes $..........0 depreciation on real estate and $..........0 depreciation on other invested assets.

EXHIBIT OF CAPITAL GAINS (LOSSES)1 2 3 4 5

Realized Change inGain (Loss) Other Total Realized Change in Unrealized

on Sales Realized Capital Gain (Loss) Unrealized Foreign Exchangeor Maturity Adjustments (Columns 1 + 2) Capital Gain (Loss) Capital Gain (Loss)

1. U.S. government bonds.................................................................. .........................60,850 ..................................... .........................60,850 ..................................... .....................................1.1 Bonds exempt from U.S. tax........................................................... ..................................... ..................................... ..................................0 ..................................... .....................................1.2 Other bonds (unaffiliated)............................................................... ......................227,908 ..................................... ......................227,908 ..................................... .....................................1.3 Bonds of affiliates............................................................................ ..................................... ..................................... ..................................0 ..................................... .....................................2.1 Preferred stocks (unaffiliated)......................................................... ..................................... ..................................... ..................................0 ..................................... .....................................

2.11 Preferred stocks of affiliates............................................................ ..................................... ..................................... ..................................0 ..................................... .....................................2.2 Common stocks (unaffiliated)......................................................... ..................................... ..................................... ..................................0 ..................................... .....................................

2.21 Common stocks of affiliates............................................................ ..................................... ..................................... ..................................0 ..................................... .....................................3. Mortgage loans............................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................4. Real estate...................................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................5. Contract loans................................................................................. ..................................... ..................................... ..................................0 ..................................... .....................................6. Cash, cash equivalents and short-term investments...................... ..................................... ..................................... ..................................0 ..................................... .....................................7. Derivative instruments..................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................8. Other invested assets..................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................9. Aggregate write-ins for capital gains (losses)................................. ..................................0 ..................................0 ..................................0 ..................................0 ..................................010. Total capital gains (losses).............................................................. ......................288,758 ..................................0 ......................288,758 ..................................0 ..................................0

DETAILS OF WRITE-INS0901. ......................................................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................0902. ......................................................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................0903. ......................................................................................................... ..................................... ..................................... ..................................0 ..................................... .....................................0998. Summary of remaining write-ins for Line 9 from overflow page..... ..................................0 ..................................0 ..................................0 ..................................0 ..................................00999. Totals (Lines 0901 thru 0903 plus 0998) (Line 9 above)............... ..................................0 ..................................0 ..................................0 ..................................0 ..................................0


16

EXHIBIT OF NONADMITTED ASSETS1 2 3

Current Year Prior Year Change in TotalTotal Total Nonadmitted Assets

Nonadmitted Assets Nonadmitted Assets (Col. 2 - Col. 1)

1. Bonds (Schedule D)................................................................................................................... .................................................. .................................................. ...............................................0

2. Stocks (Schedule D):

2.1 Preferred stocks............................................................................................................... .................................................. .................................................. ...............................................0

2.2 Common stocks............................................................................................................... .................................................. .................................................. ...............................................0

3. Mortgage loans on real estate (Schedule B):

3.1 First liens.......................................................................................................................... .................................................. .................................................. ...............................................0

3.2 Other than first liens........................................................................................................ .................................................. .................................................. ...............................................0

4. Real estate (Schedule A):

4.1 Properties occupied by the company.............................................................................. .................................................. .................................................. ...............................................0

4.2 Properties held for the production of income.................................................................. .................................................. .................................................. ...............................................0

4.3 Properties held for sale................................................................................................... .................................................. .................................................. ...............................................0

5. Cash (Schedule E-Part 1), cash equivalents (Schedule E-Part 2)and short-term investments (Schedule DA).............................................................................. .................................................. .................................................. ...............................................0

6. Contract loans............................................................................................................................ .................................................. .................................................. ...............................................0

7. Derivatives (Schedule DB)........................................................................................................ .................................................. .................................................. ...............................................0

8. Other invested assets (Schedule BA)....................................................................................... .................................................. .................................................. ...............................................0

9. Receivables for securities.......................................................................................................... .................................................. .................................................. ...............................................0

10. Securities lending reinvested collateral assets (Schedule DL)................................................. .................................................. .................................................. ...............................................0

11. Aggregate write-ins for invested assets.................................................................................... ...............................................0 ...............................................0 ...............................................0

12. Subtotals, cash and invested assets (Lines 1 to 11)................................................................. ...............................................0 ...............................................0 ...............................................0

13. Title plants (for Title insurers only)............................................................................................ .................................................. .................................................. ...............................................0

14. Investment income due and accrued........................................................................................ .................................................. .................................................. ...............................................0

15. Premiums and considerations:

15.1 Uncollected premiums and agents' balances in the course of collection....................... .................................2,371,077 .................................2,574,822 ....................................203,745

15.2 Deferred premiums, agents' balances and installments booked butdeferred and not yet due................................................................................................. .................................................. .................................................. ...............................................0

15.3 Accrued retrospective premiums..................................................................................... .................................................. .................................................. ...............................................0

16. Reinsurance:

16.1 Amounts recoverable from reinsurers............................................................................. .................................................. .................................................. ...............................................0

16.2 Funds held by or deposited with reinsured companies.................................................. .................................................. .................................................. ...............................................0

16.3 Other amounts receivable under reinsurance contracts................................................. .................................................. .................................................. ...............................................0

17. Amounts receivable relating to uninsured plans....................................................................... .................................................. .................................................. ...............................................0

18.1 Current federal and foreign income tax recoverable and interest thereon............................... .................................................. .................................................. ...............................................0

18.2 Net deferred tax asset............................................................................................................... ...............................19,532,987 ....................................196,721 .............................(19,336,266)

19. Guaranty funds receivable or on deposit.................................................................................. .................................................. .................................................. ...............................................0

20. Electronic data processing equipment and software................................................................ .................................................. .................................................. ...............................................0

21. Furniture and equipment, including health care delivery assets.............................................. .................................................. .................................................. ...............................................0

22. Net adjustment in assets and liabilities due to foreign exchange rates.................................... .................................................. .................................................. ...............................................0

23. Receivables from parent, subsidiaries and affiliates................................................................. .................................................. .................................................. ...............................................0

24. Health care and other amounts receivable............................................................................... .................................................. .................................................. ...............................................0

25. Aggregate write-ins for other than invested assets................................................................... .................................2,043,133 ....................................973,168 ...............................(1,069,965)

26. Total assets excluding Separate Accounts, Segregated Accounts and ProtectedCell Accounts (Lines 12 through 25)......................................................................................... ...............................23,947,197 .................................3,744,711 .............................(20,202,486)

27. From Separate Accounts, Segregated Accounts and Protected Cell Accounts...................... .................................................. .................................................. ...............................................0

28. TOTALS (Lines 26 and 27)....................................................................................................... ...............................23,947,197 .................................3,744,711 .............................(20,202,486)


1101. Advances-P2P & Recoveries.................................................................................................... .................................................. .................................................. ...............................................0

1102. Prepaid Expenses...................................................................................................................... .................................................. .................................................. ...............................................0

1103. Security Deposits....................................................................................................................... .................................................. .................................................. ...............................................0

1198. Summary of remaining write-ins for Line 11 from overflow page............................................. ...............................................0 ...............................................0 ...............................................0

1199. Totals (Lines 1101 thru 1103 plus 1198) (Line 11 above)........................................................ ...............................................0 ...............................................0 ...............................................0

2501. Prepaid Expense....................................................................................................................... ......................................34,349 ......................................18,052 .....................................(16,297)

2502. Rent Deposit.............................................................................................................................. ....................................504,413 ....................................504,413 ...............................................0

2503. Other Receivable....................................................................................................................... ....................................917,199 ....................................175,447 ...................................(741,752)

2598. Summary of remaining write-ins for Line 25 from overflow page............................................. ....................................587,172 ....................................275,256 ...................................(311,916)

2599. Totals (Lines 2501 thru 2503 plus 2598) (Line 25 above)........................................................ .................................2,043,133 ....................................973,168 ...............................(1,069,965)


17

EXHIBIT 1 - ENROLLMENT BY PRODUCT TYPE FOR HEALTH BUSINESS ONLYTotal Members at End of 6

1 2 3 4 5 Current YearPrior First Second Third Current Member

Source of Enrollment Year Quarter Quarter Quarter Year Months

1. Health maintenance organizations.............................................................................................................................................. ....................................189,953 ....................................159,691 ....................................155,831 ....................................155,218 ....................................153,116 .................................1,887,556

2. Provider service organizations.................................................................................................................................................... .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

3. Preferred provider organizations................................................................................................................................................. .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

4. Point of service............................................................................................................................................................................ .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

5. Indemnity only............................................................................................................................................................................. .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

6. Aggregate write-ins for other lines of business........................................................................................................................... ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0

7. Total............................................................................................................................................................................................ ....................................189,953 ....................................159,691 ....................................155,831 ....................................155,218 ....................................153,116 .................................1,887,556


0601. .................................................................................................................................................................................................... .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

0602. .................................................................................................................................................................................................... .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

0603. .................................................................................................................................................................................................... .................................................. .................................................. .................................................. .................................................. .................................................. ..................................................

0698. Summary of remaining write-ins for Line 6 from overflow page.................................................................................................. ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0

0699. Totals (Lines 0601 thru 0603 plus 0698) (Line 6 above)............................................................................................................. ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0 ...............................................0

NOTES TO FINANCIAL STATEMENTS

(1) Organization and Summary of Significant Accounting Policies

(a) Organization

MMM Healthcare, LLC. (the Company or MMM) was organized under the laws of the

Commonwealth of Puerto Rico on December 28, 2000 and is a wholly owned subsidiary of

MMM Holdings, Inc. (Holdings or Parent Company), a corporation organized under the laws

of the Commonwealth of Puerto Rico. Until December 12, 2012, Holdings was wholly owned

by Aveta Inc., a Delaware corporation (Aveta). On December 12, 2012, immediately prior to

the merger of Aveta into a subsidiary of Collaborative Care Holdings, LLC (the Merger):

(1) Holdings became a wholly owned subsidiary of a newly created subsidiary of Aveta,

InnovaCare, Inc., a Puerto Rico corporation (InnovaCare), and (2) InnovaCare was

distributed to Aveta’s stockholders, including holders of Aveta equity options and 2007 Plan

awards.

Prior to the Merger, Aveta entered into a Separation Agreement by and among Aveta and

Holdings providing for the separation of Aveta’s U.S.-based Medicare and

commercial-delegated businesses (NAMM), all of which following the Merger are held by

Aveta, from its Puerto Rico-based, Medicare managed care operations, all of which following

the Merger are held by the InnovaCare. In addition, Holdings and Aveta each assumed all of

the liabilities relating to the assets so held by it subsequent to the Merger, and indemnified the

other party against any claims relating to such assets. (The Separation Agreement also

provided for the distribution of InnovaCare to Aveta’s stockholders as described above).

The Company was organized to develop and provide Medicare Advantage Plan (MA Plan)

coverage to residents of Puerto Rico who are eligible for Medicare benefits. The MA Plan

offered by the Company provides plan members with full Medicare Part A and Plan B

benefits plus coverage of Medicare deductibles and copayment amounts and additional

benefits that traditional fee-for-service Medicare does not provide. Since January 2006, the

MA Plan has also offered Medicare Part D drug coverage (MA-PD plan). The MA Plan

operates as a health services organization (HSO) whereby members are covered for care

provided by physicians, hospitals, and other healthcare providers.

The Company offers its Medicare Advantage Plan pursuant to a contract with the United

States Centers for Medicare and Medicaid Services (CMS), a federal agency within the

U.S. Department of Health and Human Services. Under the terms of this contract, CMS pays

the Company a fixed amount that is subject to future adjustments for each member of the

Company’s coordinated care plan and the Company provides the coverage to that member for

the health services provided. The contract is for a period of one year commencing January 1

and ending on December 31, and can be renewed for periods of one year, as defined in the

contract. The contract was renewed effective January 1, 2014 for a period of one year. The

Company also provides supplemental health coverage to Medicare and Medicaid dual eligible

members enrolled in a specified MA-PD plan.


26

(b) Basis of Presentation

The accompanying statutory financial statements of the Company have been prepared in

accordance with accounting practices prescribed or permitted by the Commissioner of

Insurance of the Commonwealth of Puerto Rico (the Commissioner of Insurance), which is a

comprehensive basis of accounting other than U.S. generally accepted accounting principles.

The Company adopted the National Association of Insurance Commissioners’ statutory

accounting practices (NAIC SAP), as the basis of its statutory accounting practices, as long as

they do not contradict the provisions of the Insurance Code of the Commonwealth of Puerto

Rico (the Insurance Code) or the Circular Letters issued by the Commissioner of Insurance.

The Commissioner of Insurance has the right to permit other specific practices that may

deviate from prescribed practices. Prescribed statutory accounting practices (SAP) include a

variety of publications of the National Association of Insurance Commissioners (NAIC)

including its codification initiative contained in its accounting practices and procedures

manual, as well as state laws, regulations, and general administrative rules. Permitted

statutory accounting practices encompass all accounting practices not so prescribed. The

Commissioner of Insurance has adopted certain permitted accounting practices that differ

from those found in NAIC SAP. However, differences adopted by the Commissioner of

Insurance do not have a significant effect on the net income and statutory capital and surplus

of the Company.

The Company with the explicit permission of the Commissioner of Insurance of the

Commonwealth of Puerto Rico, recognized the following deferred tax charges, deferred tax

asset and tax credits as an admitted assets in the December 31, 2014 and 2013 in the

accompanying statutory statement of admitted assets, liabilities and capital and surplus.

The use of this permitted practice did not had an impact on compliance with RBC

requirements as the Company would have been in a Company Action Level RBC, as defined

in the Insurance Code, for the years ended 2014 and 2013.

(c) Nonadmitted Assets

Certain assets designated as nonadmitted assets have been excluded from the statutory

statements of admitted assets, liabilities, and capital and surplus by a charge to unassigned

surplus.

The nonadmitted assets charged to unassigned surplus during 2014 and 2013 are as follows:

2014 2013

Prepaid expenses and rent security deposits $ 538,761 522,465 Receivables and advance to providers 3,875,448 3,025,524 Deferred tax assets 19,532,987 196,721

$ 23,947,196 3,744,710

(d) Use of Estimates

The preparation of the statutory financial statements requires management of the Company to

make estimates and assumptions relating to the reported amounts included in the statutory

financial statements and accompanying notes. The most significant items subject to estimates

and assumptions are the actuarial determination for liabilities related to medical costs, the


26.1

Company’s estimated risk adjustment payments receivable from CMS, the valuation of

securities carried at fair value, accruals for medical incentive bonus, and certain amounts

recorded related to the Part D program. Actual results could differ from these estimates.

(e) Recognition of Premium Revenue

Premium revenue is recognized as revenue over the period in which service or benefits are

obligated to be provided. The Company recognizes premium revenue for the Part D payments

received from CMS for which it assumes risk. The Company does not record revenue related

to Part D payments from CMS that represent payments for claims for which it assumes no

risk (see note 4).

Every year, CMS adjusts the premium base paid to MAPD plans for risk factor

considerations. These adjustments are related to the severity of the clinical condition of each

member and are calculated by

CMS using, for the most part, claims data from the prior year. Final risk factor adjustments

for the year are paid on a lump-sum basis to account for the proper risk factor retroactively to

the beginning of the year. Changes in revenues from CMS resulting from the periodic

changes in risk adjustment scores for the Company’s membership are recognized when the

amounts become determinable, and the collectability is reasonably assured. Such estimates

are regularly reviewed and updated and any resulting adjustments are included in the current

period’s results.

Substantially all revenues recognized by the Company are received from CMS and from the

Commonwealth of Puerto Rico Health Insurance Administration (ASES by its Spanish

acronym). Revenues are recognized ratably over the period of coverage based on anticipated

CMS and ASES reimbursement rates, number of enrollees, and expected Medicare and

Medicaid eligibility. Actual amounts received from CMS and ASES are subject to adjustment

based on subsequent review of members’ eligibility or retroactive adjustments of

reimbursement rates. An estimate is made of such retroactive adjustments based on historical

trends, premiums billed, number of members, expected eligibility, and other information.

Retroactive membership adjustments result from enrollment changes not yet processed, or not

yet reported by CMS.

Expenses incurred in connection with the acquisition of business, such as sales and brokers’

commissions, are charged to operations as incurred.

(f) Cash, Cash Equivalents, and Short-Term Investments

The Company considers all highly liquid investments with original maturities of three months

or less to be cash equivalents (none at December 31, 2014 and 2013). Short-term investments

are defined as short-term highly liquid investments with remaining maturities of one year or

less (excluding those investments classified as cash equivalents). Short-term investments

having an original maturity of less than one year are stated at cost. At December 31, 2014 and

2013, cash and short-term investments consisted of cash deposited in financial institutions

and money market funds amounting to approximately $44,724,000 and $5,885,000,

respectively, of which approximately $3,006,000 and $199,000, respectively, represent

short-term investments.

(g) Investment Securities

Bonds and other debt securities, and equity securities are valued in accordance with rules

promulgated by NAIC. Bonds and other debt securities eligible for amortization under such


26.2

rules and nonredeemable preferred stocks are stated at amortized cost. Equity securities

comprised by common stocks, including bonds and municipal securities held in mutual funds,

are carried at estimated fair value. Adjustments reflecting the unrealized appreciation or

depreciation of equity securities are shown as a component of surplus, net of tax and are not

included in the determination of the net gain from operations.

Realized gains or losses on the sale of investments are included in operations and are derived

using the specific-identification method for determining the cost of securities sold. Interest

and dividend income is recognized when earned.

The Company applies the provisions of Statement of Statutory Accounting Principles (SSAP)

No. 43, Loan-Backed and Structured Securities (SSAP No. 43R), which requires insurers to

separate other-than-temporary impairments between interest and noninterest-related declines

in the value of all loan-backed and structured securities.

A decline in the fair value of any security below cost that is deemed to be

other-than-temporary impairment (OTTI) results in a reduction in carrying amount to fair

value. The impairment is charged to operations and a new cost basis for the security is

established. To determine whether an impairment is other-than-temporary, the Company

considers all available information relevant to the recoverability of the security, including

past events, current conditions, and reasonable and supportable forecasts when developing

estimate of cash flows expected to be collected. Evidence considered in this assessment

includes the reasons for the impairment, the severity and duration of the impairment, changes

in value subsequent to year-end, and forecasted performance of the investee.

Premiums and discounts on bonds and other debt securities are amortized or accreted over the

life of the related security as an adjustment to yield using the effective-interest method. Such

amortization and accretion is included in the investment income line item in the

accompanying statutory statements of revenue and expenses.

The Company’s investments are exposed to three primary sources of risk: credit, interest rate,

and liquidity risk. The financial statement risks, stemming from such investment risks, are

those associated with the determination of estimated fair values, the diminished ability to sell

certain investments in times of strained market conditions, the recognition of impairments

and the recognition of income on certain investments. These financial statement risks may

have a material effect on the amounts presented within the statutory financial statements.

(h) Fair Value Measurements

The Company follows the guidance in the provisions of SAP No. 100, Fair Value

Measurements (SAP 100), for fair value measurements of financial assets and financial

liabilities that are recognized or disclosed at fair value in the statutory financial statements on

a recurring basis. SAP 100 defines fair value as the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date and also establishes a framework for measuring fair value and expands

disclosures about fair value measurements.

SSAP No. 100 was revised with an effective date of January 1, 2012 to include the gross

presentation of purchases, sales, issuances, and settlements in the Level 3 fair value

measurement rollforward. The revisions also include a disclosure in the statutory financial

statements of aggregate fair value and level in the fair value hierarchy for all financial

instruments when they are reported or measured at fair value or their fair value is otherwise

disclosed.


26.3

The carrying amounts of cash and cash equivalents, short-term investments, receivables,

accounts payable, and accrued liabilities approximate fair value because of the short-term

nature of these instruments and should be collected or paid within 12 months after year-end.

The Company utilizes valuation techniques that maximized the use of observable inputs and

minimizes the use unobservable inputs. Additional information on the fair value of

investments is included in note 5.

(i) Medical Claim Liabilities and Medical Costs and Claims

Medical claim liabilities are accrued as services are rendered, including claims in process and

other medical liabilities and an estimate for claims incurred but not yet reported (IBNR). The

IBNR is determined based upon an actuarial analysis of the Company’s historical claim

payment patterns, management estimates, and other statistics. In addition, the Company

contracts with various service providers, which are compensated based on a capitation basis.

Expenses related to these providers, which are based in part on estimates, are recorded in the

period in which the related services are rendered.

The medical claim liabilities are necessarily based on estimates and, while management

believes that the amounts are adequate, the ultimate liability may be in excess of or less than

the amounts provided. The methods for making such estimates and for establishing the

resulting liability are continually reviewed, and any adjustments are reflected in the statutory

statements of revenue and expenses of the current period. Other medical claims liabilities

include medical costs disputes based upon an analysis of potential outcomes, assuming a

combination of litigation and settlement strategies. The actual results could differ materially

from the amount recorded in the statutory financial statements of the Company.

Medical costs and claims consist of claim payments, capitation payments, risk-sharing

payments, compensation to doctors and pharmacy costs, net of rebates, as well as estimates of

future payments of claims provided for services rendered prior to the end of the reporting

period. Capitation payments represent monthly contractual fees disbursed to physicians and

other providers who are responsible for providing medical care to members. Risk-sharing

payments represent amounts paid under risk-sharing arrangements with providers, including

independent physician associations. Pharmacy costs represent payments for members’

prescription drug benefits, net of rebates from drug manufacturers. Rebates are recognized

when the rebates are earned according to the contractual arrangements with the respective

vendors. Premiums the Company pays to reinsurer are reported as an off-set to premiums,

and related reinsurance recoveries are reported as reductions from medical expenses.

(j) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and

liabilities are recognized for the future tax consequences attributable to differences between

the financial statement carrying amounts of existing assets and liabilities and their respective

tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in

which those temporary differences are expected to be recovered or settled.

Under SAP, the amount permitted to be recognized is more restrictive and, the effect on

deferred tax assets and liabilities of a change in tax rates is recognized in the accompanying

statutory statements of changes in capital and surplus in the period that includes the

enactment date.


26.4

Gross deferred tax assets generally are admitted to the extent the Company’s income taxes

paid in prior years that can be recovered through loss carrybacks; plus the lesser of (a) the

amount of gross deferred tax assets expected to be realized within one year after year-end, or

(b) 10% of statutory capital and surplus as of year-end; plus any remaining deferred tax assets

that can be offset against existing gross deferred tax liabilities. Companies subject to

Risk-Based Capital (RBC) can elect to admit a higher amount of deferred taxes (a) the

amount of gross deferred tax assets expected to be realized within three years after year-end,

or (b) 15% of statutory capital and surplus as of year-end.

The Company reviews its deferred tax assets for recoverability and establishes a statutory

valuation allowance based on historical taxable income, projected future taxable income,

applicable tax strategies, and the expected timing of the reversals of existing temporary

differences. A valuation allowance is provided when it is more likely than not that some

portion or all of the deferred tax assets will not be realized.

The Company is subject to Puerto Rico income taxes as an other-than-life insurance entity.

Other-than-life insurance entities are taxed essentially the same as other corporations with

taxable income determined on the prescribed statutory accounting practices. Also, operations

are subject to an alternative minimum income tax, which is calculated based on a formula

established by the existing tax laws. Any alternative minimum income tax paid may be used

as a credit against the excess, if any, of regular income tax over the alternative minimum

income tax in future years.

Tax credits purchased are initially recorded at cost. Gains on tax credits are deferred until the

value of the tax credits utilized exceeds its cost. Losses on tax credits are recognized when

known. Gains and losses on tax credits are reflected in other income in the accompanying

statutory statements of revenue and expenses.

Deferred tax charges are amortized to income tax expense in proportion to the realization of

the tax benefits that gave rise to the deferred tax charge.

The Company accounts for uncertainty in income taxes by prescribing a recognition threshold

and measurement attribute for the financial statement recognition and measurement of a tax

position taken or expected to be taken in a tax return. The Company recognizes interest and

penalties relating to uncertain tax positions in income tax expense.

(k) Acquisition Accounting

On October 1, 2014, the Company, First Medical Health Plan, Inc. (“FMHP”) and CMS

executed a novation agreement to acquire FMHP’s CMS contracts effective on that date. In

connection therewith the Company’s affiliate MSO executed a Hospital Services Agreement

with an affiliate of FMHP. FMHP received 4,318,816 shares of InnovaCare, Inc. common

stock, which number is subject to adjustment for certain subsequent events. The Company

had no acquisitions during 2013.

(2) Accounting for Prescription Drugs Benefit under Medicare Part D

Medicare prescription drug coverage is available to eligible members with Medicare. As a result,

the Company renewed their contracts with CMS to offer MA-PD insurance coverage for medical

and prescription drug benefits.

In general, pharmacy benefits under Part D plans may vary in terms of coverage levels and

out-of-pocket costs for beneficiary premiums, deductibles, and coinsurance. However, all Part D

plans must offer either “standard coverage” or its actuarial equivalent (with the Company’s


26.5

out-of-pocket threshold and deductible amounts that do not exceed those of standard coverage).

These “defined standard” benefits represent the minimum level of benefits mandated by Congress.

The payment the Company receives monthly from CMS generally represents the Company’s bid

amount for providing insurance coverage. The Company recognizes premium revenue for providing

this insurance coverage ratably over the term of the annual contract. However, the CMS payment is

subject to 1) risk sharing through the risk corridor provisions and 2) reinsurance subsidy in order

for the Company and CMS to share the risk associated with financing the ultimate costs of the Part

D benefit and (3) CMS coverage gap discount program (CGDP) subsidy.

The amount of revenue payable to a plan by CMS is subject to adjustment, positive or negative,

based upon the application of risk corridors that compare a plan’s revenues targeted in their bids

(target amount) to actual prescription drug costs. Variances exceeding certain thresholds may result

in CMS making additional payments to the Company (risk sharing receivable) or require the

Company to refund to CMS (risk sharing payable) a portion of the payments the Company

received. Actual prescription drug costs subject to risk sharing with CMS are limited to the costs

that are, or would have been, incurred under the CMS “defined standard” benefit plan (allowable

risk corridor costs). The Company recognizes any changes in the risk sharing receivable from or

payable to CMS as an adjustment to premium revenue.

Reinsurance subsidies represent payments from CMS for claims the Company paid for which the

Company assumed no risk. Claims paid above the out-of-pocket or catastrophic threshold for which

the Company is not at risk are all reimbursed by CMS through the reinsurance subsidy for Part D

plans offering the standard coverage. The Company accounts for these subsidies, net of

withdrawals, as a liability for amounts held under uninsured plans in the statutory statements of

admitted assets, liabilities, and capital and surplus and as a financing activity in the statutory

statements of cash flows. The Company does not recognize premium revenue or claims expense for

these CMS subsidies.

Part D sponsors are required to provide the discounts for applicable drugs in the Medicare Part D

coverage gap (difference between the initial coverage limit and the catastrophic coverage threshold)

at point-of-sale under the CGDP. Part D sponsors receive monthly prospective payments from CMS

under the CGDP. These prospective payments provide cash flows to Part D sponsors for advancing

the gap discounts at the point of sale. The Company accounts for these prospective payments or

subsidies as a liability in the statutory statements of admitted assets, liabilities and capital and

surplus and as a financing activity in the statutory statements of cash flows. On a quarterly basis,

CMS invoices drug manufacturers for discounts provided by Part D sponsors which are recorded as

an account receivable from manufacturers (approximately $11,812,000 and $8,469,000 at

December 31, 2014 and 2013, respectively,) as part of other receivables in the accompanying

statutory statements of admitted assets, liabilities and capital and surplus. Manufacturers remit

payments for invoiced amounts directly to Part D sponsors. The prospective payments made to Part

D sponsors are reduced by the discount amounts invoiced to manufacturers. The Company does not

recognize premium revenue or claims expense for these CMS prospective payments or invoiced

amounts to manufacturers.

These estimates of amounts due to or from CMS are primarily determined on the prescription drug

benefit claim data submitted by plans to CMS in the form of Prescription Drug Event (PDE) data

records. The Company used PDE submission reports and data, claims paid data, and actuarial

assumptions pursuant to CMS risk sharing and reinsurance guidelines in order to estimate the final

settlement amounts due to or from CMS.


26.6

The Company recorded at December 31, 2014 and 2013 a risk sharing payable of approximately

$15,710,000 and $2,453,000, respectively, which is reported as aggregate health policy reserves;

and a reinsurance receivable of approximately $24,061,000 and $14,853,000, respectively, reported

as amounts receivable related to uninsured plans at December 31, 2014 and 2013 in the

accompanying statutory statements of admitted assets, liabilities, and capital and surplus. The

Company has a CGDP liability at December 31, 2014 and 2013 amounting to approximately

$9,790,000 and $11,303,000, respectively, reported as an offset to amounts receivable related to

uninsured plans in the accompanying statutory statements of admitted assets, liabilities, and capital

and surplus.

The Part D amounts due from (to) CMS are necessarily based on estimates and, while management

believes that the amounts are adequate, the ultimate balance may be in excess or less than the

amount provided. The methodology for making such estimates and for establishing the resulting

Part D balances is continually reviewed, and adjustments, if any, are reflected in the current year.

The final Part D amounts due to or from CMS are determined within one year after the contract

year-end. The Company recorded changes in estimates for Part D amounts due to or from CMS that

decreased and increased income before taxes in the amount of approximately $13,672,000 and

$13,005,000 for the years ended December 31, 2014 and 2013, respectively. The Company also

receives premiums to enhance the drug benefit coverage to Medicaid-eligible members under the

Medicare Platino Program sponsored by ASES. At December 31, 2014 and 2013, the Company has

receivables from ASES of approximately $161,000 and $1,020,000, respectively, which are

reflected as components of premium receivables in the accompanying statutory statements of

admitted assets, liabilities and capital and surplus.

Pharmacy benefit costs are recognized as incurred. The Company has subcontracted the pharmacy

claims administration to a third-party pharmacy benefit manager.

(3) Investment Securities

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of

investment securities at December 31, 2014 and 2013 are as follows:

2014

Gross Gross

Amortized unrealized unrealized Estimated

cost gains losses fair value

U.S. Treasury securities and

obligations of U.S. government

agencies, state and authorities $ 30,329,101 38,944 16,117 30,351,928

Mortgage-backed securities 29,219,679 698,572 65,977 29,852,274

Asset-backed securities 8,046,272 2,474 48,563 8,000,183

Collateralized mortgage obligations 5,340,754 10,493 24,792 5,326,455

Corporate bonds 73,213,421 592,926 101,353 73,704,994

Foreign securities 4,002,286 42,576 — 4,044,862

Bonds and other

debt securities 150,151,513 1,385,985 256,802 151,280,696

Equity securities 250,000 — — 250,000

$ 150,401,513 1,385,985 256,802 151,530,696


26.7

2013

Gross Gross

Amortized unrealized unrealized Estimated

cost gains losses fair value



agencies, state and authorities $ 90,384,440 114,657 71,819 90,427,278

Mortgage-backed securities 34,270,358 259,703 505,876 34,024,185

Asset-backed securities 20,376,376 18,949 99,764 20,295,561

Collateralized mortgage obligations 5,527,469 19,843 44,904 5,502,408

Corporate bonds 105,980,425 1,271,310 168,705 107,083,030

Foreign securities 4,007,292 127,691 — 4,134,983

Bonds and other

debt securities 260,546,360 1,812,153 891,068 261,467,445


$ 260,796,360 1,812,153 891,068 261,717,445

Proceeds from sales of bonds and other debt securities during 2014 and 2013 amounted to

approximately $151,291,000 and $67,409,000, respectively.

Gross unrealized losses on investment securities and the estimated fair value of the related

securities, aggregated by investment category and length of time that individual securities have

been in a continuous unrealized loss position as of December 31, 2014 and 2013 are as follows:

2014

Less than 12 months 12 months or longer Total

Gross Gross Gross

Estimated unrealized Estimated unrealized Estimated unrealized

fair value losses fair value losses fair value losses


obligations of U.S. governmentagencies, state and authorities $ 21,061,346 16,117 21,061,346 16,117

Mortgage-backed securities — — 4,385,648 65,977 4,385,648 65,977

Asset-backed securities 2,547,100 4,401 3,954,987 44,162 6,502,087 48,563 Collateralized mortgage obligations 1,453,408 7,018 1,444,517 17,774 2,897,925 24,792 Corporate bonds 23,506,742 86,484 2,287,764 14,869 25,794,506 101,353

Total $ 48,568,596 114,020 12,072,916 142,782 60,641,512 256,802


26.8

2013

Less than 12 months 12 months or longer Total

Gross Gross Gross

Estimated unrealized Estimated unrealized Estimated unrealized

fair value losses fair value losses fair value losses

U.S. Treasury securities andobligations of U.S. government

agencies, state and authorities $ 27,003,484 71,819 — — 27,003,484 71,819 Mortgage-backed securities 18,486,339 505,876 — — 18,486,339 505,876 Asset-backed securities 10,687,331 99,764 — — 10,687,331 99,764

Collateralized mortgage obligations 2,783,843 44,904 — — 2,783,843 44,904 Corporate bonds 31,501,176 168,705 — 31,501,176 168,705

Total $ 90,462,173 891,068 — — 90,462,173 891,068

The Company regularly monitors and evaluates the difference between the cost and estimated fair

value of investments. For investments with a fair value below cost, the process includes evaluating

the length of time and the extent to which cost exceeds fair value, the prospects and financial

condition of the issuer, and the Company’s intent and ability to retain the investment to allow for

recovery in fair value, among other factors. This process is not exact and further requires

consideration of risks such as credit and interest rate risks. Consequently, if an investment’s cost

exceeds its fair value solely due to changes in interest rates, impairment may not be appropriate. If

after monitoring and analyzing, the Company determines that a decline in the estimated fair value

of any fixed income or equity security below cost is other than temporary, the carrying amount of

the security is reduced to its fair value. The impairment is charged to operations and a new cost

basis for the security is established.

The Company has assessed each position for credit and interest risk. The unrealized losses on

investment securities as of December 31, 2014 and 2013 were caused principally by interest rate

changes. The contractual terms of these investments do not permit the issuer to settle the securities

at a price less than the amortized cost of the investment. Because the Company has the ability and

intent to hold these securities until a market price recovery or maturity, these investments are not

considered other-than-temporarily impaired. In the case of the U.S. Treasury securities and

corporate bonds, management of the Company examined the guidance in SSAP No. 26, Bonds,

Excluding Loan-Backed and Structured Securities, and concluded that the Company has the ability

and intent to hold its investment in securities until a market price recovery or maturity. For the

mortgage-backed securities, asset-backed securities and collateralized mortgage obligations,

management evaluated SSAP No. 43R and concluded that the Company does not intend to sell such

security, and it is more likely than not that it will not be required to sell such security prior to the

recovery of its amortized cost basis.

The amortized cost and estimated fair value of debt securities at December 31, 2014 by contractual

maturity are shown below. Expected maturities may differ from contractual maturities because

borrowers may have the right to call or prepay obligations with or without call or prepayment

penalties.


26.9

Amortized Estimatedcost fair value

Due in one year or less $ 24,179,625 24,360,838 Due after one year through five years 88,705,937 89,067,401 Mortgage and asset backed securities 37,265,951 37,852,457

$ 150,151,513 151,280,696

Fair Value Measurements

The Company follows SAP No. 100, Fair Value Measurements (SAP 100) for fair value

measurements of financial assets and financial liabilities and for fair value measurements of

nonfinancial items that are recognized or disclosed at fair value in the financial statements on a

recurring basis. SAP 100 establishes a fair value hierarchy that prioritizes the inputs to valuation

techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted

prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest

priority to measurements involving significant unobservable inputs (Level 3 measurements). The

three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or

liabilities that the Company has the ability to access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly.

Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on

the lowest level input that is significant to the fair value measurement in its entirety.


26.10

The following tables present assets and liabilities that are measured at fair value on a recurring

basis at December 31, 2014 and 2013:

Fair value measurements at reporting

date using

As reflected

on the

statutory

statement of

admitted Quoted

assets prices

liabilities, in active Significant

capital and markets for other Significant

surplus as of identical observable unobservable

December 31, assets inputs inputs

2014 (Level 1) (Level 2) (Level 3)

Assets:

Short term investments $ 3,006,013



agencies, state, and authorities 30,329,101 30,351,928

Mortgage-backed securities 29,219,679 29,852,274

Asset-backed securities 8,046,272 8,000,183

Corporate bonds 73,213,421 73,704,994

Collateralized mortgage

obligations 5,340,754 5,326,455

Foreign securities 4,002,286 4,044,862

Equity securities 250,000 250,000

Restricted certificates of deposit 600,000 600,000

Total $ 151,001,513 3,606,013 151,280,696 250,000


26.11

Fair value measurements at reporting

date using

As reflected

on the

statutory

statement of

admitted Quoted

assets prices

liabilities, in active Significant

capital and markets for other Significant

surplus as of identical observable unobservable

December 31, assets inputs inputs

2013 (Level 1) (Level 2) (Level 3)

Assets:

Short term investments $ 199,281 199,281 — —



agencies, state, and authorities 90,384,440 — 90,427,278 —

Mortgage-backed securities 34,270,358 — 34,024,185 —

Asset-backed securities 20,376,376 — 20,295,561 —

Corporate bonds 105,980,425 — 107,083,030 —

Collateralized mortgage

obligations 5,527,469 — 5,502,408 —

Foreign securities 4,007,292 — 4,134,983 —


Restricted certificates of deposit 600,000 600,000 — —

Total $ 261,595,641 799,281 261,467,445 250,000

(4) Investment Income

Components of investment income, including net realized gains and losses on sales of securities, for

the years ended December 31, 2014 and 2013 were as follows:

2014 2013

Cash and short-term investments $ 114,643 235,631 Bonds and other debt securities 3,403,563 2,900,341 Preferred stocks 23,690 23,750

Total $ 3,541,896 3,159,722

For the years ended December 31, 2014 and 2013, net realized gains of approximately $289,000

and $107,000, respectively, are included as component of investment income.

(5) Transactions with Related Parties

Holdings provides certain management, infrastructure support, and consulting services in the

operations of the Company and other subsidiaries of Holdings. For these services, which Holdings

charges a management fee based on 120% of Holdings monthly operating expenses, Holdings

charged the Company approximately $140,675,000 and $160,645,000 during the years ended


26.12

December 31, 2014 and 2013, respectively. Such service charges are presented within the general

and administrative expenses in the accompanying statutory statements of revenues and expenses.

The Company has a delegation agreement with MSO of Puerto Rico, Inc. (MSO), an affiliate, to

provide management and administrative services with respect to the network of physicians and

other healthcare providers contracted by the Company in exchange for a management fee. The

delegation agreement terms include a fixed and variable component. The fixed component is

determined based on a fixed percentage (4%) of the total premiums earned by the Company. The

variable component is the 25% of the Surplus as contractually defined in the delegation agreements.

During 2014 and 2013, MSO charged the Company approximately $61,225,000 and $79,581,000,

respectively, of which $57,325,000 and $69,023,000, respectively, was for the fixed component

which is included in general and administrative expenses and $3,900,000 and $10,558,000,

respectively, was for the variable component which is included in medical costs and claims in the

accompanying statements of revenue and expenses.

The amounts due to and due from parent company and affiliates at December 31, 2014 and 2013

are noninterest-bearing.

(6) Medical Claim Liabilities

The following table reconciles changes in medical claim liabilities during the years ended

December 31, 2014 and 2013 as follows:

2014 2013

Medical claim liabilities at beginning of year $ 158,009,329 163,439,504

Medical costs and claims incurred:Current period insured events 1,237,730,000 1,438,962,000 Prior periods insured events (32,375,000) (24,210,000)

Total incurred 1,205,355,000 1,414,752,000

Payment for claims:Current period insured events 1,113,874,210 1,291,639,226 Prior periods insured events 113,013,058 128,542,949

Total paid 1,226,887,268 1,420,182,175

Medical claim liabilities at end of year $ 136,477,061 158,009,329

The above table shows the components of changes in medical claim liabilities for the periods

indicated. Medical claim liabilities include claims in process and other medical claims liabilities as

well as provisions for the estimate of incurred but not reported claims and provisions for disputed

claims obligations. Such estimates are developed using actuarial principles and assumptions that

consider among other things, contractual requirements, historical utilization trends and payment

patterns, benefit changes, medical inflation, seasonality, membership, and other relevant factors.

Because medical claim liabilities include various actuarially developed estimates, the Company’s

actual medical costs and claims expense may be more or less than the Company’s previously

developed estimates.


26.13

The incurred claims for period insured events during 2014 and 2013 were lower due to a favorable

development of claim liabilities that is attributed to lower than expected cost per service and

utilization trends.

(7) Income Taxes

The income tax expense differs from the amount computed by applying the Puerto Rico statutory

income tax rate of 39% in 2014 and 2013 to income before income taxes as a result of the

following:

2014 2013

Computed “expected” tax expense $ (9,998,949) 19,040,615 Increase (reduction) in income taxes resulting from:

Exempt interest income (94,955) (31,421) Intangibles and deferred tax charge amortization

tax rate differential (4,747,337) (10,345,095) Change in nonadmitted deferred income tax asset (337,826) (148,045) Other 338,338 (1,821,259)

Total $ (14,840,729) 6,694,795

Income tax expense $ 3,308,542 2,044,099 Change in deferred income taxes (18,149,271) 4,650,696

Total statutory income tax expense $ (14,840,729) 6,694,795

On June 30, 2013, the Governor of Puerto Rico signed into law Act No. 40, Tax Burden

Redistribution and Adjustment Act. This law amended several articles of the Puerto Rico Internal

Revenue Code signed on January 1, 2011. The most significant change to the Company is the

amendment to section 1022.02 retaining the twenty percent (20%) regular income tax rate but,

establishing higher surtax rates. Under the new law, the maximum combined rate will be 39%

effective as of January 1, 2013.

On July 1, 2014 the Company’s subsidiaries converted into Limited Liabilities Companies (“LLC”)

and immediately thereafter, elected to be treated as partnerships for Puerto Rico tax purposes

following a tax free reorganization pursuant to the provisions of sections 1034.04(b)(6) and 1072.01

of the Puerto Rico tax code.


26.14

Deferred income taxes reflect the tax effects of temporary differences between carrying amounts of

assets and liabilities for financial reporting purposes and income tax purposes. Deferred tax assets

and deferred tax liabilities at December 31, 2014 and 2013 of the Company are composed of the

following:

2014 2013 Change

Deferred tax assets:Ordinary:

Net operating losses $ 12,346,946 — 12,346,946 Reserve contigency 5,464,499 — 5,464,499 Advances to providers 228,997 107,350 121,647 Premiums receivable 924,720 1,004,181 (79,461) Security deposits 196,720 196,720 — Other (including items <5% of total

ordinary tax assets) 371,105 75,465 295,640

Total deferred tax assets 19,532,987 1,383,716 18,149,271

Nonadmitted (19,532,987) (196,721) (19,336,266)

Admitted ordinary deferredtax assets $ — 1,186,995 (1,186,995)

Under SAP, gross deferred tax assets generally are admitted to the extent the Company’s income

taxes paid in prior years that can be recovered through loss carrybacks; plus the amounts

determined by applying the Realization Threshold Limitation Table – RBC Reporting Entities (RBC

Reporting Entity); plus any remaining deferred tax assets that can be offset against existing gross

deferred tax liabilities. Additionally, gross deferred tax assets are reduced by a statutory valuation

allowance adjustment, based on the weight of available evidence; it is more likely than not that

some portion or all the gross deferred tax assets will not realized. For the year ended December 31,

2014 and 2013 no statutory valuation allowance adjustments were required.

The change in deferred income tax during 2014 and 2013 amounted to $18,149,271 and

$4,650,696, respectively, and resulted in a decrease and increase of unassigned surplus,

respectively.

In 2011, MMM entered into a transaction with Holdings where MMM distributed to Holdings, at an

estimated fair value of approximately $145,514,000 certain intangibles associated with the 2004

acquisition of MMM. Immediately after, MMM Holdings transferred the same intangibles to MMM

at the same estimated fair value of $145,514,000. MMM paid approximately $21,827,000 to the

Puerto Rico Treasury Department on the resulting taxable gain which was recorded as a deferred

tax charge in the accompanying statutory statements of admitted assets, liabilities, and capital and

surplus. Beginning January 1, 2011, the deferred tax charge and the intangibles new tax basis will

be amortized over a four year period ending 2014. In 2012, MMM entered into a second transaction

with Holdings where MMM distributed to Holdings, at an estimated fair value of approximately


26.15

$56,000,000 certain intangibles associated with the 2004 acquisition of MMM. Immediately after,

MMM Holdings transferred the same intangibles to MMM at the same estimated fair value of

$56,000,000. MMM paid approximately $8,400,000 to the Puerto Rico Treasury Department on the

resulting taxable gain which was recorded as a deferred tax charge in the accompanying statutory

statements of admitted assets, liabilities, and capital and surplus. Beginning January 1, 2012, the

deferred tax charge and the intangibles new tax basis will be amortized over a four year period

ending 2015.

Unrecognized tax benefits result from income tax positions taken or expected to be taken on the

Company’s income tax returns for which a tax benefit has not been recorded in the Company’s

statutory financial statements. For the years ended December 31, 2014 and 2013, there were no

unrecognized tax benefits.

The Company files its income tax return with a statute of limitation. In the normal course of the

business, the Company is subject to examination by various taxing authorities. As of December 31,

2014, the Company may be subject to income tax examinations for the fiscal tax years ended 2009

through 2014.


26.16

(8) Significant Risks and Uncertainties Including Business and Credit Concentration

Medicare Advantage Payments

Medicare Advantage payment benchmarks have been cut over the last several years, including

2014, with additional funding reductions to be phased in through 2017. Further, in April, 2014,

CMS released its final notice of 2015 Medicare Advantage benchmark rates and payment policies.

The final notice included significant reductions to 2015 Medicare Advantage standardized payment

benchmarks, which have been roughly offset by upward adjustments related to risk scores and

coverage for cost increases from a new Medicare FFS Uncompensated Care Policy. The expected

net effect of the 2015 payment benchmark reductions and offsetting adjustments is that actual 2015

payment rates will be flat to slightly positive prior to the impact of the health insurance premium

tax. However, the Company’s 2015 actual results remain subject to deviations in, risk scores,

demographic mix and other company-specific variables relative to our current best estimates.

Additionally, the Budget Control Act of 2011, as amended by the American Taxpayer Relief Act of

2012, triggered automatic across the board budget cuts (known as sequestration), including a 2%

reduction in Medicare Advantage and Medicare Part D payments beginning April 1, 2013. The

impact of sequestration cuts to our Medicare Advantage revenues continues to be partially

mitigated by reductions in provider reimbursements for those care providers with rates indexed to

Medicare Advantage revenues or Medicare fee for service reimbursement rates, as well as for those

that receive shares of a surplus pool. Due to the commencement of a full year of sequestration

reductions in 2014, the continuation of these reductions will not generate a year over year reduction

in revenue in 2015.

In addition, beginning in 2014, Medicare Advantage plans were required to have a minimum

medical loss ratio (“MLR”) of 85% and will be required to remit to CMS any amount below that

percentage. CMS has issued final guidance as to how this requirement will be calculated for

Medicare Advantage plans. Based on our results of MLR for the full year of 2014, in the opinion of

management, the minimum MLR standard will not have any material impact on the Company’s

financial position or results of operations.

Our 2014 Medicare Advantage rates reflect a 3% CMS quality bonus, as provided by the CMS

Quality Demonstration program implemented by CMS from 2012 – 2014 for a quality rating of 3.0

stars. This expanded star ratings bonus program expired after 2014. In 2015, quality bonus

payments will be paid only to four and five star plans, compared to current bonuses that are

available to qualifying plans rated three stars or higher. Our star rating for 2015 is 3.0, for which we

will receive no bonus payment and which places ours plans at the lowest of three possible “rebate”

levels. Rebate levels are used to determine the amount of additional benefits a plan is able to offer

its members beyond those covered under the traditional fee-for-service Medicare program.

However, 2015 contract year star ratings were recently announced and we have received a 3.5 star

rating for that year. This will increase the amount of rebates available to us to fund additional

benefits to our members in 2015, by raising our rebate percentage to 65%, up from 50% in 2014,

but our star rating remains below the level required for a CMS quality bonus.

(9) Contingencies

(a) Legal Matters

Jose R. Valdez v. Aveta Inc., MMM Healthcare, Inc., PMC Medicare Choice, Inc., MSO of

Puerto Rico, Inc. and MMM Holdings, Inc. In May 2011, Jose R. Valdez, a former

employee of the Company filed a qui tam lawsuit alleging, among other things, that Company

had improperly submitted risk condition documentation to CMS in connection with its

Medicare Advantage businesses. The action brought by Valdez was filed under seal and was


26.17

the subject of a 30-month investigation by the Department of Justice. In February 2014, the

DOJ advised the Court that it was declining to join in the case and as a result the complaint

was unsealed and subsequently served by Valdez on the Company. In February 2015, the

Court ruled in favor of the Company’s motion seeking to move venue of the case to Puerto

Rico. While the Federal District Court assigned to the case has not set a schedule for

consideration of the current pre-trial motions, and the Company has not yet responded to the

complaint, it categorically denies the allegations and in the opinion of management, the

ultimate outcome of this matter is not expected to have a material financial impact on the

Company.

MMM v. Cardio Services, Inc., Diagnostic Nuclear Medicine, Inc., Dr. Orlando Marini and

Dr. Ricardo Santiago. In 2009, the Company and one of its affiliates terminated the provider

agreements of Dr. Orlando Marini and his affiliated cardiology provider entities (the “Marini

Entities”) after an internal clinical review indicated the Marini Entities had submitted

materially false billing documentation. Following that termination, the Company commenced

an action in the First Instance Court of the Commonwealth of Puerto Rico to recover provider

reimbursements related to such billings. The Marini Entities have denied all wrongdoing and

have asserted counterclaims against the Company related to the terminations, including

claims for lost profits and reputational damage. The case is in the early stages and the parties

are currently engaged in discovery. Although the Company believes they have valid claims

and valid defenses to the Marini Entities counterclaims, there can be no assurance that the

Company will prevail against the Marini Entities. Notwithstanding the foregoing, in the event

of an adverse ruling against the Company such a determination is not expected to have a

material financial impact on the Company.

Miscellaneous. At December 31, 2014 and 2013, the Company is a defendant in various other

lawsuits and other claims arising in the ordinary course of business. In addition, current and

past business practices of the Company are subject to review or investigation by, or

subpoenas or other requests for information from, various state, commonwealth or federal

healthcare regulatory authorities, state or commonwealth attorneys general, the U.S.

Department of Justice, U.S. Attorneys, the Office of the Inspector General, and other state,

commonwealth or federal authorities or bodies. In the opinion of management, the ultimate

disposition of these matters will not have a material adverse effect on the financial position

and results of operations of the Company.

From time to time in the ordinary course of business, the Company (1) denies payments for

service based on factors such as medical necessity and failure to meet preauthorization

requirements and (2) determines payments for service based on contractual provisions.

Certain providers have notified the Company that they disagree with its determinations and

have threatened legal action. The Company has included in its medical cost liabilities a

provision for the potential payments to these providers.

(b) Audits by CMS and the Commissioner of Insurance of the Commonwealth of Puerto Rico

Under the terms of the agreement with CMS, MMM Healthcare and PMC are subject to audit

of compliance with federal regulations. During 2014, the Company was subject to (i) audits

by the Office of the Commissioner of Insurance for years 2008 through 2012; (ii) CMS audits

for years 2012 and 2011 and (iii) CMS is auditing the 2013 bid for PMC. The Company

believes these audits will not have a material adverse effect on the Company’s condensed

consolidated financial statements. Future audits could result in claims against MMM

Healthcare and PMC that could have a material adverse effect on the financial position and

results of operations of the Company.


26.18

(10) Subsequent Events

Beginning in 2014, the Patient Protection and Affordable Care Act (the PPACA) requires

health insurers that meet certain minimum written premium thresholds and provides health

insurance for any qualifying U.S. health risk in 2014 and beyond, to pay a fee to the Federal

government to fund other aspects of the PPACA. The Company has made an assessment of

this requirement under the PPACA and estimates a financial impact on the Company of

approximately 2% of the 2014 premium revenue.


26.19


27

GENERAL INTERROGATORIESPART 1 - COMMON INTERROGATORIES - GENERAL

1.1 Is the reporting entity a member of an Insurance Holding Company System consisting of two or more affiliated persons, one or more of whichis an insurer? Yes [ X ] No [ ]If yes, complete Schedule Y, Parts 1, 1A and 2.

1.2 If yes, did the reporting entity register and file with its domiciliary State Insurance Commissioner, Director or Superintendent or with suchregulatory official of the state of domicile of the principal insurer in the Holding Company System, a registration statement providingdisclosure substantially similar to the standards adopted by the National Association of Insurance Commissioners (NAIC) in its ModelInsurance Holding Company System Regulatory Act and model regulations pertaining thereto, or is the reporting entity subject to standardsand disclosure requirements substantially similar to those required by such Act and regulations? Yes [ X ] No [ ] N/A [ ]

1.3 State regulating? Puerto Rico2.1 Has any change been made during the year of this statement in the charter, by-laws, articles of incorporation, or deed of settlement of the

reporting entity? Yes [ X ] No [ ]2.2 If yes, date of change: 07/01/20143.1 State as of what date the latest financial examination of the reporting entity was made or is being made. 12/31/20043.2 State the as of date that the latest financial examination report became available from either the state of domicile or the reporting entity.

This date should be the date of the examined balance sheet and not the date the report was completed or released. 12/31/20073.3 State as of what date the latest financial examination report became available to other states or the public from either the state of domicile or the

reporting entity. This is the release date or completion date of the examination report and not the date of the examination (balance sheet date). 69/8/20053.4 By what department or departments?

Office of the Commissioner of Insurance

3.5 Have all financial statement adjustments within the latest financial examination report been accounted for in a subsequent financial statementfiled with departments? Yes [ ] No [ ] N/A [ X ]

3.6 Have all of the recommendations within the latest financial examination report been complied with? Yes [ ] No [ ] N/A [ X ]4.1 During the period covered by this statement, did any agent, broker, sales representative, non-affiliated sales/service organization or any combination

thereof under common control (other than salaried employees of the reporting entity) receive credit or commissions for or control a substantialpart (more than 20 percent of any major line of business measured on direct premiums) of:4.11 sales of new business? Yes [ ] No [ X ]4.12 renewals? Yes [ ] No [ X ]

4.2 During the period covered by this statement, did any sales/service organization owned in whole or in part by the reporting entity or an affiliate,receive credit or commissions for or control a substantial part (more than 20 percent of any major line of business measured on direct premiums) of:4.21 sales of new business? Yes [ ] No [ X ]4.22 renewals? Yes [ ] No [ X ]

5.1 Has the reporting entity been a party to a merger or consolidation during the period covered by this statement? Yes [ ] No [ X ]5.2 If yes, provide the name of the entity, NAIC company code, and state of domicile (use two letter state abbreviation) for any entity that has ceased

to exist as a result of the merger or consolidation.1 2 3

Name of Entity NAIC Co. Code State of Domicile

6.1 Has the reporting entity had any Certificates of Authority, licenses or registrations (including corporate registration, if applicable) suspendedor revoked by any governmental entity during the reporting period? Yes [ ] No [ X ]

6.2 If yes, give full information:

7.1 Does any foreign (non-United States) person or entity directly or indirectly control 10% or more of the reporting entity? Yes [ ] No [ X ]7.2 If yes,

7.21 State the percentage of foreign control ..........................................%7.22 State the nationality(ies) of the foreign person(s) or entity(ies); or if the entity is a mutual or reciprocal,

the nationality of its manager or attorney-in-fact and identify the type of entity(ies) (e.g., individual,corporation, government, manager or attorney-in-fact)

1 2 Nationality Type of Entity

8.1 Is the company a subsidiary of a bank holding company regulated by the Federal Reserve Board? Yes [ ] No [ X ]8.2 If response to 8.1 is yes, please identify the name of the bank holding company.

8.3 Is the company affiliated with one or more banks, thrifts or securities firms? Yes [ ] No [ X ]8.4 If response to 8.3 is yes, please provide the names and locations (city and state of the main office) of any affiliates regulated by a federal

financial regulatory services agency [i.e. the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), the FederalDeposit Insurance Corporation (FDIC) and the Securities Exchange Commission (SEC)] and identify the affiliate's primary federal regulator.

1 2 3 4 5 6 Affiliate Name Location (City, State) FRB OCC FDIC SEC

9. What is the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit? KPMG, LLP 250 Muñoz Rivera Ave. Suite 100 San Juan PR 00918

10.1 Has the insurer been granted any exemptions to the prohibited non-audit services provided by the certified independent public accountantrequirements as allowed in Section 7H of the Annual Financial Reporting Model Regulation (Model Audit Rule), or substantially similarstate law or regulation? Yes [ ] No [ X ]

10.2 If the response to 10.1 is yes, provide information related to this exemption:

10.3 Has the insurer been granted any exemptions related to the other requirements of the Annual Financial Reporting Model Regulation asallowed for in Section 17A of the Model Regulation, or substantially similar state law or regulation? Yes [ ] No [ X ]

10.4 If the response to 10.3 is yes, provide information related to this exemption:


27.1

GENERAL INTERROGATORIESPART 1 - COMMON INTERROGATORIES - GENERAL

10.5 Has the reporting entity established an Audit Committee in compliance with the domiciliary state insurance laws? Yes [ X ] No [ ] N/A [ ]10.6 If the answer to 10.5 is no or n/a, please explain.

11. What is the name, address and affiliation (officer/employee of the reporting entity or actuary/consultant associated with an actuarialconsulting firm) of the individual providing the statement of actuarial opinion/certification? Judah Rabinowitz- Innovacare Health Fort Lee NJ

12.1 Does the reporting entity own any securities of a real estate holding company or otherwise hold real estate indirectly? Yes [ ] No [ X ]12.11 Name of real estate holding company

12.12 Number of parcels involved ...........................................12.13 Total book/adjusted carrying value ...........................................

12.2 If yes, provide explanation.

13. FOR UNITED STATES BRANCHES OF ALIEN REPORTING ENTITIES ONLY:13.1 What changes have been made during the year in the United States manager or the United States trustees of the reporting entity?

13.2 Does this statement contain all business transacted for the reporting entity through its United States Branch on risks wherever located? Yes [ ] No [ X ]13.3 Have there been any changes made to any of the trust indentures during the year? Yes [ ] No [ X ]13.4 If answer to (13.3) is yes, has the domiciliary or entry state approved the changes? Yes [ ] No [ ] N/A [ X ]14.1 Are the senior officers (principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions)

of the reporting entity subject to a code of ethics, which includes the following standards? Yes [ X ] No [ ]a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;b. Full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the reporting entity;c. Compliance with applicable governmental laws, rules and regulations;d. The prompt internal reporting of violations to an appropriate person or persons identified in the code; ande. Accountability for adherence to the code.

14.11 If the response to 14.1 is no, please explain:

14.2 Has the code of ethics for senior managers been amended? Yes [ ] No [ X ]14.21 If the response to 14.2 is yes, provide information related to amendment(s).

14.3 Have any provisions of the code of ethics been waived for any of the specified officers? Yes [ ] No [ X ]14.31 If the response to 14.3 is yes, provide the nature of any waiver(s).

15.1 Is the reporting entity the beneficiary of a Letter of Credit that is unrelated to reinsurance where the issuing or confirming bank is not on theSVO Bank List? Yes [ ] No [ X ]

15.2 If the response to 15.1 is yes, indicate the American Bankers Association (ABA) Routing Number and the name of the issuing or confirming bankof the Letter of Credit and describe the circumstances in which the Letter of Credit is triggered.

1 2 3 4American BankersAssociation (ABA) Issuing or Confirming Circumstances That Can TriggerRouting Number Bank Name the Letter of Credit Amount

PART 1 - COMMON INTERROGATORIES - BOARD OF DIRECTORS16. Is the purchase or sale of all investments of the reporting entity passed upon either by the Board of Directors or a subordinate committee thereof? Yes [ X ] No [ ]17. Does the reporting entity keep a complete permanent record of the proceedings of its Board of Directors and all subordinate committees thereof? Yes [ X ] No [ ]18. Has the reporting entity an established procedure for disclosure to its Board of Directors or trustees of any material interest or affiliation

on the part of any of its officers, directors, trustees or responsible employees that is in conflict or is likely to conflict with the official dutiesof such person? Yes [ X ] No [ ]

PART 1 - COMMON INTERROGATORIES - FINANCIAL19. Has this statement been prepared using a basis of accounting other than Statutory Accounting Principles (e.g., Generally Accepted Accounting Principles)? Yes [ ] No [ X ]20.1 Total amount loaned during the year (inclusive of Separate Accounts, exclusive of policy loans):

20.11 To directors or other officers $........................................020.12 To stockholders not officers $........................................020.13 Trustees, supreme or grand (Fraternal only) $........................................0

20.2 Total amount of loans outstanding at the end of year (inclusive of Separate Accounts, exclusive of policy loans):20.21 To directors or other officers $........................................020.22 To stockholders not officers $........................................020.23 Trustees, supreme or grand (Fraternal only) $........................................0

21.1 Were any assets reported in this statement subject to a contractual obligation to transfer to another party without the liability forsuch obligation being reported in the statement? Yes [ ] No [ X ]

21.2 If yes, state the amount thereof at December 31 of the current year:21.21 Rented from others .............................................21.22 Borrowed from others .............................................21.23 Leased from others .............................................21.24 Other .............................................


27.2

PART 1 - COMMON INTERROGATORIES - FINANCIAL22.1 Does this statement include payments for assessments as described in the Annual Statement Instructions other than guaranty

fund or guaranty association assessments? Yes [ ] No [ X ]22.2 If answer is yes:

22.21 Amount paid as losses or risk adjustment .............................................22.22 Amount paid as expenses .............................................22.23 Other amounts paid .............................................

23.1 Does the reporting entity report any amounts due from parent, subsidiaries or affiliates on Page 2 of this statement? Yes [ X ] No [ ]23.2 If yes, indicate any amounts receivable from parent included in the Page 2 amount. $.........................2,827,705

PART 1 - COMMON INTERROGATORIES - INVESTMENT24.01 Were all the stocks, bonds and other securities owned December 31 of current year, over which the reporting entity has exclusive control,

in the actual possession of the reporting entity on said date (other than securities lending programs addressed in 24.03)? Yes [ X ] No [ ]24.02 If no, give full and complete information relating thereto.

24.03 For security lending programs, provide a description of the program including value for collateral and amount of loaned securities, and whethercollateral is carried on or off-balance sheet (an alternative is to reference Note 17 where this information is also provided).

24.04 Does the company's security lending program meet the requirements for a conforming program as outlined in theRisk-Based Capital Instructions? Yes [ ] No [ ] N/A [ X ]

24.05 If answer to 24.04 is yes, report amount of collateral for conforming programs. .....................................24.06 If answer to 24.04 is no, report amount of collateral for other programs. .....................................24.07 Does your securities lending program require 102% (domestic securities) and 105% (foreign securities) from the counterparty at the

outset of the contract? Yes [ ] No [ ] N/A [ X ]24.08 Does the reporting entity non-admit when the collateral received from the counterparty falls below 100%? Yes [ ] No [ ] N/A [ X ]24.09 Does the reporting entity or the reporting entity's securities lending agent utilize the Master Securities Lending Agreement (MSLA)

to conduct securities lending? Yes [ ] No [ ] N/A [ X ]24.10 For the reporting entity's security lending program, state the amount of the following as of December 31 of the current year:

24.101 Total fair value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2. .....................................24.102 Total book adjusted/carrying value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2. .....................................24.103 Total payable for securities lending reported on the liability page. .....................................

25.1 Were any of the stocks, bonds or other assets of the reporting entity owned at December 31 of the current year not exclusively under thecontrol of the reporting entity or has the reporting entity sold or transferred any assets subject to a put option contract that is currently in force?(Exclude securities subject to Interrogatory 21.1 and 24.03) Yes [ ] No [ X ]

25.2 If yes, state the amount thereof at December 31 of the current year:25.21 Subject to repurchase agreements .....................................25.22 Subject to reverse repurchase agreements .....................................25.23 Subject to dollar repurchase agreements .....................................25.24 Subject to reverse dollar repurchase agreements .....................................25.25 Placed under option agreements .....................................25.26 Letter stock or securities restricted as to sale - excluding FHLB Capital Stock .....................................25.27 FHLB Capital Stock .....................................25.28 On deposit with states $.....................600,00025.29 On deposit with other regulatory bodies .....................................25.30 Pledged as collateral - excluding collateral pledged to an FHLB .....................................25.31 Pledged as collateral to FHLB - including assets backing funding agreements .....................................25.32 Other .....................................

25.3 For category (25.26) provide the following:1 2 3

Nature of Restriction Description Amount

26.1 Does the reporting entity have any hedging transactions reported on Schedule DB? Yes [ ] No [ X ]26.2 If yes, has a comprehensive description of the hedging program been made available to the domiciliary state? Yes [ ] No [ ] N/A [ X ]

If no, attach a description with this statement.

27.1 Were any preferred stocks or bonds owned as of December 31 of the current year mandatorily convertible into equity, or, at the option of theissuer, convertible into equity? Yes [ ] No [ X ]

27.2 If yes, state the amount thereof at December 31 of the current year: .....................................28. Excluding items in Schedule E-Part 3-Special Deposits, real estate, mortgage loans and investments held physically in the reporting entity's offices,

vaults or safety deposit boxes, were all stocks, bonds and other securities, owned throughout the current year held pursuant to a custodial agreementwith a qualified bank or trust company in accordance with Section 1, III - General Examination Considerations, F. Outsourcing of Critical FunctionsCustodial or Safekeeping Agreements of the NAIC Financial Condition Examiners Handbook? Yes [ X ] No [ ]

28.01 For agreements that comply with the requirements of the NAIC Financial Condition Examiners Handbook, complete the following:1 2

Name of Custodian(s) Custodian's Address

28.02 For all agreements that do not comply with the requirements of the NAIC Financial Condition Examiners Handbook, provide thename, location and a complete explanation:

1 2 3 Name(s) Location(s) Complete Explanation(s)

28.03 Have there been any changes, including name changes, in the custodian(s) identified in 28.01 during the current year? Yes [ ] No [ X ]28.04 If yes, give full and complete information relating thereto:

1 2 3 4 Old Custodian New Custodian Date of Change Reason

28.05 Identify all investment advisors, brokers/dealers or individuals acting on behalf of broker/dealers that have access to the investmentaccounts, handle securities and have authority to make investments on behalf of the reporting entity:

1 2 3Central Registration Depository Number(s) Name Address

29.1 Does the reporting entity have any diversified mutual funds reported in Schedule D-Part 2 (diversified according to the Securities andExchange Commission (SEC) in the Investment Company Act of 1940 [Section 5 (b) (1)])? Yes [ ] No [ X ]


27.3

PART 1 - COMMON INTERROGATORIES - INVESTMENT29.2 If yes, complete the following schedule:

1 2 3

CUSIP # Name of Mutual Fund Book/AdjustedCarrying Value

29.2999. TOTAL 029.3 For each mutual fund listed in the table above, complete the following schedule:

1 2 3 4 Amount of Mutual

Fund's Book/Adjusted Name of Mutual Fund Name of Significant Holding Carrying Value (from the above table) of the Mutual Fund Attributable to Holding Date of Valuation

30. Provide the following information for all short-term and long-term bonds and all preferred stocks. Do not substitute amortized value or statement value for fair value.1 2 3

Excess of Statement Statement over Fair Value (-), (Admitted) Fair or Fair Value over

Value Value Statement (+)30.1 Bonds................................................................................ ................................... ................................... ................................030.2 Preferred stocks................................................................ ................................... ................................... ................................030.3 Totals................................................................................. ................................0 ................................0 ................................030.4 Describe the sources or methods utilized in determining the fair values:

SVO

31.1 Was the rate used to calculate fair value determined by a broker or custodian for any of the securities in Schedule D? Yes [ X ] No [ ]31.2 If the answer to 31.1 is yes, does the reporting entity have a copy of the broker's or custodian's pricing policy (hard copy or electronic copy) for all

brokers or custodians used as a pricing source? Yes [ X ] No [ ]31.3 If the answer to 31.2 is no, describe the reporting entity's process for determining a reliable pricing source for purposes of disclosure of fair value for Schedule D.

32.1 Have all the filing requirements of the Purposes and Procedures Manual of the NAIC Securities Valuation Office been followed? Yes [ X ] No [ ]32.2 If no, list exceptions:

PART 1 - COMMON INTERROGATORIES - OTHER33.1 Amount of payments to trade associations, service organizations and statistical or rating bureaus, if any? $.................................033.2 List the name of the organization and the amount paid if any such payment represented 25% or more of the total payments to

trade associations, service organizations and statistical or rating bureaus during the period covered by this statement.1 2

Name Amount Paid

34.1 Amount of payments for legal expenses, if any? $.................................034.2 List the name of the firm and the amount paid if any such payment represented 25% or more of the total payments

for legal expenses during the period covered by this statement.1 2

Name Amount Paid

35.1 Amount of payments for expenditures in connection with matters before legislative bodies, officers or departments of government, if any? $.................................035.2 List the name of the firm and the amount paid if any such payment represented 25% or more of the total payment expenditures

in connection with matters before legislative bodies, officers or departments of government during the period covered by this statement.1 2

Name Amount PaidNONE


28

GENERAL INTERROGATORIESPART 2 - HEALTH INTERROGATORIES

1.1 Does the reporting entity have any direct Medicare Supplement Insurance in force? Yes [ ] No [ X ]1.2 If yes, indicate premium earned on U.S. business only $.....................................01.3 What portion of Item (1.2) is not reported on the Medicare Supplement Insurance Experience Exhibit? ..........................................

1.31 Reason for excluding

1.4 Indicate amount of earned premium attributable to Canadian and/or Other Alien not included in Item (1.2) above. ..........................................1.5 Indicate total incurred claims on all Medicare Supplement insurance. $.....................................01.6 Individual policies:

Most current three years:1.61 Total premium earned ..........................................1.62 Total incurred claims ..........................................1.63 Number of covered lives ..........................................All years prior to most current three years:1.64 Total premium earned ..........................................1.65 Total incurred claims ..........................................1.66 Number of covered lives ..........................................

1.7 Group policies:Most current three years:1.71 Total premium earned ..........................................1.72 Total incurred claims ..........................................1.73 Number of covered lives ..........................................All years prior to most current three years:1.74 Total premium earned ..........................................1.75 Total incurred claims ..........................................1.76 Number of covered lives ..........................................

2. Health test: 1 2Current Year Prior Year

2.1 Premium Numerator........................................ ........1,423,330,363 ........1,732,988,5172.2 Premium Denominator.................................... ........1,423,330,363 ........1,732,988,5172.3 Premium Ratio (2.1/2.2).................................. ......................100.0 ......................100.02.4 Reserve Numerator......................................... ...........152,711,703 ...........174,133,4192.5 Reserve Denominator..................................... ...........152,711,703 ...........174,133,4192.6 Reserve Ratio (2.4/2.5)................................... ......................100.0 ......................100.0

3.1 Has the reporting entity received any endowment or gift from contracting hospitals, physicians, dentists, or others that is agreed will bereturned when, and if the earnings of the reporting entity permits? Yes [ ] No [ X ]

3.2 If yes, give particulars:

4.1 Have copies of all agreements stating the period and nature of hospitals', physicians', and dentists' care offered to subscribers anddependents been filed with the appropriate regulatory agency? Yes [ X ] No [ ]

4.2 If not previously filed, furnish herewith a copy(ies) of such agreement(s). Do these agreements include additional benefits offered? Yes [ X ] No [ ]5.1 Does the reporting entity have stop-loss reinsurance? Yes [ X ] No [ ]

5.2 If no, explain:

5.3 Maximum retained risk (see instructions):5.31 Comprehensive medical $.....................................05.32 Medical only $.....................................05.33 Medicare supplement $.....................................05.34 Dental and vision $.....................................05.35 Other limited benefit plan $.....................................05.36 Other $.....................................0

6. Describe arrangement which the reporting entity may have to protect subscribers and their dependents against the risk of insolvency includinghold harmless provisions, conversion privileges with other carriers, agreements with providers to continue rendering services, and any otheragreements:

7.1 Does the reporting entity set up its claim liability for provider services on a service date basis? Yes [ X ] No [ ]7.2 If no, give details:

8. Provide the following information regarding participating providers:8.1 Number of providers at start of reporting year .......................................08.2 Number of providers at end of reporting year .......................................0

9.1 Does the reporting entity have business subject to premium rate guarantees? Yes [ ] No [ X ]9.2 If yes, direct premium earned:

9.21 Business with rate guarantees between 15-36 months ..........................................9.22 Business with rate guarantees over 36 months ..........................................

10.1 Does the reporting entity have Incentive Pool, Withhold or Bonus arrangements in its provider contracts? Yes [ X ] No [ ]10.2 If yes:

10.21 Maximum amount payable bonuses $.....................................010.22 Amount actually paid for year bonuses $.....................................010.23 Maximum amount payable withholds $.....................................010.24 Amount actually paid for year withholds $.....................................0


28.1

GENERAL INTERROGATORIESPART 2 - HEALTH INTERROGATORIES

11.1. Is the reporting entity organized as:11.12 A Medical Group/Staff Model, Yes [ ] No [ X ]11.13 An Individual Practice Association (IPA), or Yes [ ] No [ X ]11.14 A Mixed Model (combination of above)? Yes [ ] No [ X ]

11.2. Is the reporting entity subject to Minimum Net Worth Requirements? Yes [ ] No [ X ]11.3. If yes, show the name of the state requiring such net worth.11.4. If yes, show the amount required. ..........................................11.5. Is this amount included as part of a contingency reserve in stockholder's equity? Yes [ ] No [ X ]11.6. If the amount is calculated, show the calculation:

12. List service areas in which reporting entity is licensed to operate:1

Name of Service Area

13.1. Do you act as a custodian for health savings account? Yes [ ] No [ X ]13.2. If yes, please provide the amount of custodial funds held as of the reporting date. ..........................................13.3. Do you act as an administrator for health savings accounts? Yes [ ] No [ X ]13.4. If yes, please provide the balance of the funds administered as of the reporting date. ..........................................

14.1 Are any of the captive affiliates reported on Schedule S, Part 3, authorized reinsurers? Yes [ ] No [ ] N/A [ X ]14.2 If the answer to 14.1 is yes, please provide the following:

1 2 3 4 Assets Supporting Reserve CreditNAIC 5 6 7

Company Domiciliary Reserve Letters of TrustCompany Name Code Jurisdiction Credit Credit Agreements Other

15. Provide the following for Individual Ordinary Life insurance* policies (U.S. business only) for the current year (prior to reinsurance assumed or ceded):15.1 Direct written premium........................................................................................................................................................................................................... $.....................................015.2 Total incured claims............................................................................................................................................................................................................... $.....................................015.3 Number of covered lives........................................................................................................................................................................................................ $.....................................0

*Ordinary Life Insurance Includes:Term (whether full underwriting, limited underwriting, jet issue, "short form app")Whole Life (whether full underwriting, limited underwriting, jet issue, "short form app")Variable Life (with or without secondary guarantee)Universal Life (with or without secondary guarantee)Variable Universal Life (with or without secondary guarantee)


29

FIVE-YEAR HISTORICAL DATA1 2 3 4 5

2014 2013 2012 2011 2010

Balance Sheet Items (Pages 2 and 3)

1. Total admitted assets (Page 2, Line 28)..................................................... .............247,281,516 .............314,160,757 .............306,499,510 .............333,317,076 .............292,134,037

2. Total liabilities (Page 3, Line 24)................................................................. .............166,967,994 .............190,478,975 .............216,688,104 .............263,836,561 .............232,624,050

3. Statutory surplus.......................................................................................... ................................... ................................... ................................... ................................... ...................................

4. Total capital and surplus (Page 3, Line 33)................................................ ...............80,313,516 .............123,681,782 ...............89,811,406 ...............69,480,515 ...............59,509,987

Income Statement Items (Page 4)

5. Total revenues (Line 8)............................................................................... ..........1,423,330,363 ..........1,732,988,517 ..........1,698,279,764 ..........1,531,826,371 ..........1,328,295,559

6. Total medical and hospital expenses (Line 18).......................................... ..........1,228,755,004 ..........1,454,874,742 ..........1,418,485,476 ..........1,250,620,463 ..........1,072,632,262

7. Claims adjustment expenses (Line 20)....................................................... ................................... ................................... ................................... ................................... ...................................

8. Total administrative expenses (Line 21)..................................................... .............223,755,585 .............232,451,407 .............189,446,877 .............151,801,321 .............150,286,776

9. Net underwriting gain (loss) (Line 24)......................................................... ..............(29,180,226) ...............45,662,368 ...............90,347,411 .............129,404,587 .............105,376,521

10. Net investment gain (loss) (Line 27)........................................................... .................3,541,896 .................3,159,722 .................4,262,267 .................5,185,757 .................5,197,382

11. Total other income (Lines 28 plus 29)......................................................... ................................... ................................... .................1,722,000 ................................... .................4,615,259

12. Net income or (loss) (Line 32)..................................................................... ..............(28,946,872) ...............46,777,991 ...............77,367,891 .............104,267,564 ...............79,779,389

Cash Flow (Page 6)

13. Net cash from operations (Line 11)............................................................. ..............(47,957,401) ...............71,802,823 .............122,936,655 ...............31,592,795 ...............23,908,656

Risk-Based Capital Analysis

14. Total adjusted capital................................................................................... ...............80,313,516 .............123,681,782 ...............89,811,406 ...............69,480,515 ...............59,509,987

15. Authorized control level risk-based capital.................................................. ...............49,581,514 ...............59,844,047 ...............58,107,089 ...............51,159,691 ...............44,272,498

Enrollment (Exhibit 1)

16. Total members at end of period (Column 5, Line 7)................................... ....................153,116 ....................189,953 ....................180,733 ....................162,577 ....................135,649

17. Total member months (Column 6, Line 7).................................................. .................1,887,556 .................2,286,044 .................2,084,184 .................1,836,197 .................1,595,451

Operating Percentage (Page 4)(Item divided by Page 4, sum of Lines 2, 3, and 5) x 100 .0

18. Premiums earned plus risk revenue (Line 2 plus Lines 3 and 5)............... ........................100.0 ........................100.0 ........................100.0 ........................100.0 ........................100.0

19. Total hospital and medical plus other non-health (Line 18 plus Line 19)... ..........................86.3 ..........................84.0 ..........................83.5 ..........................81.6 ..........................80.8

20. Cost containment expenses........................................................................ ................................... ................................... ................................... ................................... ...................................

21. Other claims adjustment expenses............................................................. ................................... ................................... ................................... ................................... ...................................

22. Total underwriting deductions (Line 23)...................................................... ........................102.1 ..........................97.3 ..........................94.7 ..........................91.6 ..........................92.1

23. Total underwriting gain (loss) (Line 24)....................................................... ...........................(2.1) ............................2.7 ............................5.3 ............................8.4 ............................7.9

Unpaid Claims Analysis (U&I Exhibit, Part 2B)

24. Total claims incurred for prior years (Line 13 Col. 5).................................. .............143,211,741 .............192,044,703 .............188,342,787 .............169,693,310 .............173,395,541

25. Estimated liability of unpaid claims - [prior year (Line 13, Col. 6)] .............171,680,400 .............200,124,328 .............183,575,360 .............168,502,308 .............182,825,671

Investments in Parent, Subsidiaries and Affiliates

26. Affiliated bonds (Sch. D Summary, Line 12, Col. 1)................................... ................................... ................................... ................................... ................................... ...................................

27. Affiliated preferred stocks (Sch D. Summary, Line 18, Col. 1)................... ................................... ................................... ................................... ................................... ...................................

28. Affiliated common stocks (Sch D. Summary, Line 24, Col. 1).................... ................................... ................................... ................................... ................................... ...................................

29. Affiliated short-term investments (subtotal included in Sch. DA,

Verification, Column 5, Line 10).................................................................. ................................... ................................... ................................... ................................... ...................................

30. Affiliated mortgage loans on real estate...................................................... ................................... ................................... ................................... ................................... ...................................

31. All other affiliated......................................................................................... ................................... ................................... ................................... ................................... ...................................

32. Total of above Lines 26 to 31...................................................................... ...............................0 ...............................0 ...............................0 ...............................0 ...............................0

33. Total investment in parent included in Lines 26 to 31 above..................... ................................... ................................... ................................... ................................... ...................................NOTE: If a party to a merger, have the two most recent years of this exhibit been restated due to a merger in compliance with the disclosure

requirements of SSAP No. 3, Accounting Changes and Correction of Errors? Yes [ ] No [ ]If no, please explain:


38

SCHEDULE T - PREMIUMS AND OTHER CONSIDERATIONSAllocated by States and Territories

1 Direct Business Only2 3 4 5 6 7 8 9

Federal Employees Life & AnnuityAccident Health Premiums and Property/ Total Deposit-

Active & Health Medicare Medicaid Benefits Plan Other Casualty Columns TypeState, Etc. Status Premiums Title XVIII Title XIX Premiums Considerations Premiums 2 Through 7 Contracts

1. Alabama........................................AL ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................2. Alaska...........................................AK ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................3. Arizona..........................................AZ ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................4. Arkansas.......................................AR ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................5. California......................................CA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................6. Colorado......................................CO ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................7. Connecticut...................................CT ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................8. Delaware......................................DE ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................9. District of Columbia......................DC ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................10. Florida...........................................FL ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................11. Georgia.........................................GA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................12. Hawaii............................................HI ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................13. Idaho..............................................ID ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................14. Illinois..............................................IL ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................15. Indiana...........................................IN ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................16. Iowa................................................IA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................17. Kansas..........................................KS ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................18. Kentucky.......................................KY ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................19. Louisiana.......................................LA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................20. Maine...........................................ME ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................21. Maryland......................................MD ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................22. Massachusetts.............................MA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................23. Michigan........................................MI ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................24. Minnesota....................................MN ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................25. Mississippi....................................MS ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................26. Missouri.......................................MO ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................27. Montana.......................................MT ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................28. Nebraska......................................NE ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................29. Nevada.........................................NV ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................30. New Hampshire...........................NH ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................31. New Jersey...................................NJ ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................32. New Mexico.................................NM ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................33. New York......................................NY ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................34. North Carolina..............................NC ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................35. North Dakota................................ND ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................36. Ohio..............................................OH ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................37. Oklahoma.....................................OK ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................38. Oregon.........................................OR ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................39. Pennsylvania................................PA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................40. Rhode Island..................................RI ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................41. South Carolina.............................SC ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................42. South Dakota................................SD ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................43. Tennessee....................................TN ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................44. Texas............................................TX ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................45. Utah..............................................UT ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................46. Vermont........................................VT ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................47. Virginia..........................................VA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................48. Washington..................................WA ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................49. West Virginia...............................WV ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................50. Wisconsin......................................WI ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................51. Wyoming......................................WY ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................52. American Samoa..........................AS ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................53. Guam...........................................GU ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................54. Puerto Rico...................................PR ....L.............. ....................... 1,423,330,363 ....................... ............................... ........................ ....................... ....1,423,330,363 .......................55. U.S. Virgin Islands........................VI ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................56. Northern Mariana Islands...........MP ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................57. Canada......................................CAN ....N............. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................58. Aggregate Other alien..................OT .....XXX........ ....................0 ....................0 ....................0 ............................0 .....................0 ....................0 .........................0 ....................059. Subtotal............................................. .....XXX........ ....................0 1,423,330,363 ....................0 ............................0 .....................0 ....................0 ....1,423,330,363 ....................060. Reporting entity contributions for

Employee Benefit Plans.................... .....XXX........ ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................61. Total (Direct Business)...................... (a)............1 ....................0 1,423,330,363 ....................0 ............................0 .....................0 ....................0 ....1,423,330,363 ....................0

DETAILS OF WRITE-INS58001. .................................................................................. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................58002. .................................................................................. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................58003. .................................................................................. ....................... ....................... ....................... ............................... ........................ ....................... .........................0 .......................58998. Summary of remaining write-ins for line 58............. ....................0 ....................0 ....................0 ............................0 .....................0 ....................0 .........................0 ....................058999. Total (Lines 58001 thru 58003 + 58998)................. ....................0 ....................0 ....................0 ............................0 .....................0 ....................0 .........................0 ....................0(L) - Licensed or Chartered - Licensed Insurance Carrier or Domicilied RRG; (R) - Registered - Non-domiciled RRGs; (Q) - Qualified - Qualified or Accredited Reinsurer;(E) - Eligible - Reporting Entities eligible or approved to write Surplus Lines in the state; (N) - None of the above - Not allowed to write business in the state.Explanation of basis of allocation by states, premiums by state, etc.

(a) Insert the number of L responses except for Canada and Other Alien.


40

SCHEDULE Y – INFORMATION CONCERNING ACTIVITIES OF INSURER MEMBERS OF A HOLDING COMPANY GROUPPART 1 – ORGANIZATIONAL CHART

MSO Of Puerto RicoLLC. ( Puerto Rico)Delegated Entity

Medical DentalNetwork Management,

LLC ( Puerto Rico)

CaribbeanAccountable Care,LLC ( Puerto Rico)

Innovacare, Inc(Puerto Rico)

MMM Holdings,LLC

( Puerto Rico)

MSO Holdings, LLC( Puerto Rico)-Dormant

Innovacare Services,Company, LLC

(Delaware)

MMM Multihealth,LLC ( Puerto Rico)

Health Plan

MMM Healthcare,LLC ( Puerto Rico)

Health Plan

PMC Medicare Choice,LLC ( Puerto Rico)

Health Plan

Castellana PhysicianServices LLC ( Puerto

Rico)

2014 ALPHABETICAL INDEXHEALTH ANNUAL STATEMENT BLANK

INDEX

Analysis of Operations By Lines of Business 7 Schedule D – Part 6 – Section 2 E16Assets 2 Schedule D – Summary By Country SI04Cash Flow 6 Schedule D – Verification Between Years SI03Exhibit 1 – Enrollment By Product Type for Health Business Only 17 Schedule DA – Part 1 E17Exhibit 2 – Accident and Health Premiums Due and Unpaid 18 Schedule DA – Verification Between Years SI10Exhibit 3 – Health Care Receivables 19 Schedule DB – Part A – Section 1 E18Exhibit 3A – Health Care Receivables Collected and Accrued 20 Schedule DB – Part A – Section 2 E19Exhibit 4 – Claims Unpaid and Incentive Pool, Withhold and Bonus 21 Schedule DB – Part A – Verification Between Years SI11Exhibit 5 – Amounts Due From Parent, Subsidiaries and Affiliates 22 Schedule DB – Part B – Section 1 E20Exhibit 6 – Amounts Due To Parent, Subsidiaries and Affiliates 23 Schedule DB – Part B – Section 2 E21Exhibit 7 – Part 1 – Summary of Transactions With Providers 24 Schedule DB – Part B – Verification Between Years SI11Exhibit 7 – Part 2 – Summary of Transactions With Intermediaries 24 Schedule DB – Part C – Section 1 SI12Exhibit 8 – Furniture, Equipment and Supplies Owned 25 Schedule DB – Part C – Section 2 SI13Exhibit of Capital Gains (Losses) 15 Schedule DB – Part D – Section 1 E22Exhibit of Net Investment Income 15 Schedule DB – Part D – Section 2 E23Exhibit of Nonadmitted Assets 16 Schedule DB – Verification SI14Exhibit of Premiums, Enrollment and Utilization (State Page) 30 Schedule DL – Part 1 E24Five-Year Historical Data 29 Schedule DL – Part 2 E25General Interrogatories 27 Schedule E – Part 1 – Cash E26Jurat Page 1 Schedule E – Part 2 – Cash Equivalents E27Liabilities, Capital and Surplus 3 Schedule E – Part 3 – Special Deposits E28Notes To Financial Statements 26 Schedule E – Verification Between Years SI15Overflow Page For Write-ins 44 Schedule S – Part 1 – Section 2 31Schedule A – Part 1 E01 Schedule S – Part 2 32Schedule A – Part 2 E02 Schedule S – Part 3 – Section 2 33Schedule A – Part 3 E03 Schedule S – Part 4 34Schedule A – Verification Between Years SI02 Schedule S – Part 5 35Schedule B – Part 1 E04 Schedule S – Part 6 36Schedule B – Part 2 E05 Schedule S – Part 7 37Schedule B – Part 3 E06 Schedule T – Part 2 – Interstate Compact 38Schedule B – Verification Between Years SI02 Schedule T – Premiums and Other Considerations 39

Schedule BA – Part 1 E07 Schedule Y – Information Concerning Activities of Insurer Members of aHolding Company Group

40

Schedule BA – Part 2 E08 Schedule Y – Part 1A – Detail of Insurance Holding Company System 41Schedule BA – Part 3 E09 Schedule Y – Part 2 – Summary of Insurer’s Transactions With Any

Affiliates42

Schedule BA – Verification Between Years SI03 Statement of Revenue and Expenses 4Schedule D – Part 1 E10 Summary Investment Schedule SI01Schedule D – Part 1A – Section 1 SI05 Supplemental Exhibits and Schedules Interrogatories 43Schedule D – Part 1A – Section 2 SI08 Underwriting and Investment Exhibit – Part 1 8Schedule D – Part 2 – Section 1 E11 Underwriting and Investment Exhibit – Part 2 9Schedule D – Part 2 – Section 2 E12 Underwriting and Investment Exhibit – Part 2A 10Schedule D – Part 3 E13 Underwriting and Investment Exhibit – Part 2B 11Schedule D – Part 4 E14 Underwriting and Investment Exhibit – Part 2C 12Schedule D – Part 5 E15 Underwriting and Investment Exhibit – Part 2D 13Schedule D – Part 6 – Section 1 E16 Underwriting and Investment Exhibit – Part 3 14

Documents

*11157 2014 2010010 0* ANNUAL STATEMENT Anuales/2014… · *11157 2014 2010010 0* ANNUAL STATEMENT For the Year Ended December 31, 2014 of the Condition and Affairs of the MMM Healthcare,

11157 2014 2010010 0 ANNUAL STATEMENT Anuales/2014… · 11157 2014 2010010 0 ANNUAL STATEMENT For the Year Ended December 31, 2014 of the Condition and Affairs of the MMM Healthcare,